Do your homework before launching your new business - KLTV.com-Tyler, Longview, Jacksonville, Texas | ETX News

Do your homework before launching your new business

Updated: Aug. 23, 2010
Research is a necessary step before launching a new business. (©iStockphoto.com/Izvorinka Jankovic) Research is a necessary step before launching a new business. (©iStockphoto.com/Izvorinka Jankovic)
 

Once you've determined what you're good at and what the market needs, its time to do some research. This may seem obvious, but its one area where many would-be entrepreneurs fall short. Just because you like an idea doesn't mean it makes a viable business.

Now is the time to roll up your sleeves and ask a lot of questions. You will need to find accurate, reliable information about your industry, your market, and the companies you will compete against. Much of the information you get will be extrapolated from reports (both from the government and commercial companies), newspapers and magazines, trade associations, university studies, and other research. This type of information is often available at business research libraries, as well as at various online databases. You'll also be doing a lot of investigating on your own. Click on the item below to learn more about how to take advantage these various research methods.

  • Talk to people already in the business
  • Contact trade associations
  • Read newspapers, magazines, trade publications, and newsletters
  • Use industry directories
  • Consult demographic/census data


Talk to potential customers and suppliers

Who will you be selling your product or service to? Contact some of these people and take an informal survey. Ask them if they would be interested in a product or service such as yours. Find out what they'd be willing to pay for it. Determine how they currently meet this need to learn about your competitors. Ask about ways your type of product or service could be improved. Suppliers and sales reps often know what other companies are up to, and can also help you get an idea of industry trends.


Talk to people already in the business

This is an excellent way to learn the pitfalls and nuances of running a particular business. You'll be surprised how many people will be willing to help you, provided you don't intend to compete with them directly (although in some cases, direct competitors may even offer assistance). Often, you just have to ask. Contact five or ten people who are excelling in the business you want to start. Tell them that you admire what they've done, and ask them if you can have a few hours of their time to discuss "the ropes" of the business. You can even offer to pay them for their time as "consultants".


Contact trade associations

Trade associations often conduct research on their respective industries. This data is usually distributed only to members, although sometimes they will make parts of their reports available to non-members and the press as well. Trade groups also publish member directories that can be useful in tracking down what firms you may be competing with. Again, these directories are usually for members only, although you can sometimes use them at your local chapter.

You also might want to speak to a trade group's "publications" department. Many trade groups publish handbooks for companies looking to get involved in their particular industries that contain helpful hints and statistics. Others offer books and courses that can aid you during your start-up phase.

To find out what trade associations follow your industry, consult:

  • Encyclopedia of Business and Professional Associations (Gale Research)
  • The Small Business Sourcebook (Gale Research)
  • Business Information Sources (University of California Press)


Read newspapers, magazines, trade publications, and newsletters

Periodicals are an excellent source for industry statistics as well as information on your competitors. Trade publications - newspapers and magazines that focus on issues affecting a particular industry - often run articles that focus on recent research reports, or they publish their own proprietary market data. You can also find news developments about your competitors and their products. The Wall Street Journal and other business publications can give you information on business trends or other economic issues that may impact your business. Local newspapers and business journals can provide you with a window into your local scene.

To find these publications, consult the following sources:

  • Wilsons Business Periodicals, Infotrac, UMI Periodical Abstracts - contain information on popular and business periodicals

  • National Newspaper Index, Wall Street Journal Annual Index, New York Times Index - as the names suggest, indexes of articles from leading newspapers.

  • Bacons Media Directories - used mostly by public relations professionals, lists trade and consumer magazines by subject category, while the newspaper directory is categorized by region.


Use industry directories

There are a wide range of directories that can provide you with information about specific companies and industries. Here is a sampling of some of the more comprehensive:

 

  • Duns Million Dollar Directory - identifies companies by SIC (Standard Industrial Classification) code, geographic location, and size. Dun & Bradstreet also publishes a number of other useful directories, including State Sales Guides, Regional Business Directories, and the Census of American Business.

  • Thomas Register - lists data on more than 100,000 manufacturing companies by type of product, company name, and location. Also includes product catalogs of many firms.

  • Moodys Manuals - comprehensive information on companies listed on the U.S. stock exchanges, including corporate history, income statements, and balance sheets.

  • MacRaes State Industrial Directory - includes product/service, SIC and company name indexes arranged by county and city.

  • Macmillan Directory of Leading Private Companies - contains information on 12,500 privately-held companies

  • U.S. Industrial Outlook - this Department of Commerce study includes growth statistics for 200 industries, including 5-year projections, background information, statistics and trend forecasts.

  • Statistical Abstract of the United States - has more than 1,000 pages of statistical information from government and private sources. Excellent for reference citations.
Consult demographic/census data

Federal, state and local governments are excellent sources of demographic information. On the federal level, the Census Bureau has details from the last U.S. census -- extremely useful for viewing your regional market. Almost every state and county publishes their own census tracts - population density and distribution figures. These show you the number of people living in specific areas such as precincts, water districts, and neighborhoods.

Also contact your local chamber of commerce of economic development authority. Since they are looking to encourage businesses to locate in their areas, they can provide you with information on population trends, payroll statistics, income characteristics, etc. Utilities (the gas and electric company) and banks may also have this kind of information available.

 

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