You personally may be absolutely sure there’s a demand for your pots of home-dried herbs or landscape photographs, but it’s far less risky if you do some market research first.

The main points to establish are:

• if there’s a demand for your product or service
• who your customers are likely to be
• where they live and currently shop
• how much money they’re prepared to spend
• when they’re likely to spend it
• how far they’ll travel to find you or whether you’ll have to go to them.

There are plenty of ways of carrying out your market research. It all depends on what type of business you’re going into and how much work you’re prepared to put in.

Options include:

• questionnaires or interviews with target clients – offer inducements/bribes for people to return questionnaires
• street vox pops
• visiting competitors’ shops or studios and sampling their product or service
• reading competitors’ websites and sales brochures
• doing internet searches for unknown rivals
• doing internet searches for the latest news in your field
• reading the relevant specialist magazines
• questioning people at relevant trade shows and demonstrations
• conducting telephone surveys. These are difficult to do and the findings can be uncertain so only bother doing them if you have a list of contact names and numbers of people who’ve at least expressed an interest in your business in the past.

THE ART OF QUESTIONING

A lot of our market research will be about asking questions. How you ask is important because you need both co-operation and honest answers. If you start politely and pleasantly most people are happy to help as long as they know you’re not selling anything (not yet anyway). Unfortunately many people will tell you what they think you want to hear rather than what they really think. Make sure you frame your questions in such a way that this is less likely to happen. This means asking open questions, along the lines of:

‘How much are you prepared to spend on a case of wine/hand-built kitchen/dog walking service?’

Rather than a leading question:

‘Would you agree that £90 for a case of New Zealand sauvignon blanc is a reasonable price?’

HOW TO STOP PEOPLE ON THE STREET

Stopping complete strangers on the street and asking them questions is an art. The first couple of times will be terrifying. But when your confidence begins to build and you relax you’ll start to enjoy it.

The trick to getting their co-operation is to explain briefly that you’re starting up a new business and wondered if they could spare a couple of minutes to help you with your research. Few people will refuse a direct appeal unless they’re in a tearing hurry.

When to do it

• Don’t do surveys in the rain, cold or wind. People won’t stop and talk. Instead, hope for a balmy sunny day when people are more likely to linger.
• Don’t do surveys at the very beginning of the day. Most people on the streets then are in a hurry to get to work.
• Don’t do surveys at the end of the day. People are tired and want to go home.

Where to do it

• Find a place where passers-by naturally slow down (successful hitchhikers use the same technique). This could be near a particularly good window display, under a large shop awning or in a traffic-free mews where it’s easier to linger. Slow them down even more by approaching them and making eye contact. But don’t get too close: you want their help, not frighten their children.
• People sitting on park benches or walls are an even easier target. They’re sitting down so they’re not in a hurry, and they won’t bother to get up and move unless they think you’re weird.
• Don’t go to places where people will be in a hurry. That means bus and railway stations at commuting time, car parks and outside supermarkets (all that frozen food defrosting).
• But outside commuting times, bus and railway stations are good because passengers are bored with waiting and happy to be distracted. You may get thrown off if you don’t ask permission from the authorities first, but they’re not going to lock you up. You get a good cross section of people to ask, especially at large mainline railway stations.
• Don’t stand outside schools unless it’s relevant to your business (you want to question parents about your new line in toddler clothing) and you’ve spoken to the head teacher first.
• Don’t do surveys in shops or on their doorsteps unless you’ve cleared it with them first otherwise they’ll throw you out. If you do want to go inside, then try to pick independent stores where there’ll be one boss who can say yes or no immediately. It’s impossible to get a straight answer from chain stores and you’ll spend a day being passed from department to department until you find someone ‘authorised’ to make a decision.
• But do try harder for a relevant shop. A provider of tailored walking or cycling holidays should try to catch customers at an outdoor/leisure store. Enlist the help of that shop. It’s in their interests: more people cycling or walking or doing outdoor things ultimately means more customers buying their products.

Other tips

• Target big groups. That way you get a lot interviews done but only have to give one initial explanation.
• Dress sensibly and non-threateningly. You may be a fine artist or sculptor who rarely changes out of paint- or clay-splattered overalls. OK in a studio but not if you’re intercepting potential customers on the street.
• Clipboards are useful but many potential interviewees will back into the nearest shop at the first sign of one. Compromise by keeping a hard-backed notebook in your bag and whip it out when you’ve got someone to talk to.

WHAT TO ASK

Don’t ask lots of questions. The answers to a few carefully thought out questions will be far more valuable. If you’ve been droning on, you’ll just get short and rushed answers that people only give in order to get rid of you. Get through the questions quickly and professionally. If you spend five minutes talking about the weather with each interviewee you’ll be there for weeks.

The type of specific and open questions you should ask:

• You’re opening a vintage dress shop/fish restaurant/garden design service. Would the interviewee ever consider using it?
• If so, how much would they be likely to spend?
• How often?
• How far would they travel to buy a dress/eat a meal/commission a new garden?
• Would they use a more expensive personalised service? Dresses/ meals/garden designs delivered to their homes?
• Do they already use an existing vintage shop/fish restaurant/ garden design service?

• If so, which one?
• If the interviewee is not interested in what you’re offering, why not?
• Is the price too high?
• Or is what you’re offering not quite right?
• If so, what could you do to persuade them to change their mind?

You may also want to prepare a list of supplementary questions that you could ask if the interviewee is really keen.

YOUR TARGET CUSTOMER

So you know what, where, when and how to ask questions. All you have to do now is identify your target customer. This is one of the foundation stones of market research. There is absolutely no point in asking a group of elderly ladies about yacht charter or teenagers about their thoughts on hanging baskets. The odd one may be interested because it would make a good birthday present for his mum. But don’t waste your time: you’re far better off concentrating your efforts on people who are likely to be typical customers.

So before you take to the streets, decide on:

• the likely age of your target customer
• their sex
• social background
• possible profession
• where they live
• if they have children
• what their hobbies are.

Some of this is going to be guesswork until you get talking to people, but you can tell a surprising amount from how people are dressed, where they’re shopping and who they’re with. This isn’t pre-judging: it’s using common sense.

There’s no minimum number of people to talk to, but it has to be enough to give a decent range of answers. Ten people are too few: a thousand isn’t practical unless you’re prepared to spend months doing it. Perhaps aim to speak to, or receive completed questionnaires from, between 20 and 80 people. Remember that you can use family and friends too if they’re relevant. That should be more than enough to see patterns beginning to emerge.

At the end of the surveys, sit down and collate your findings. Remember that it’s not a book that you’re writing, but just a few notes which are largely for your benefit. Aim to end up with a summary something like:

About three quarters of the women I questioned (aged between 30 and 60) said they ‘d be interested in buying vintage dresses. The maximum they’d be prepared to spend was £200. Half said they’d be prepared to drive ten miles to my shop, and a quarter said they ‘d drive up to 20 miles. Eighty per cent of the women said they ‘d only buy a vintage frock for a special occasion, and that would probably be around Christmas.

So, on the basis of your research so far you’ve established that there’s definitely a demand there for your shop. You probably need to be in a town at the centre of a good road network. You’ve established the most your customers are likely to pay. And you’ve also learnt that the run up to Christmas is likely to be your busiest time, so you need to think about how you can boost trade the rest of the year.

CHECKING ON THE COMPETITION

Market research isn’t just about asking questions of potential customers. You should be researching the wider picture too.

Finding out about the competition is key. This is where you can learn a great deal about your business, and it’s also quite good fun being a spy. So where is the enemy? How many are out there? Does it matter if you have a rival in the next village? What exactly are they offering? How much do they charge? What are their terms and conditions? Are they any good? How can you be better?

Places to check for competitors:

• internet search
• local and national phone books
• local paper adverts
• specialist websites, directories and magazines
• specialist clubs and associations
• asking around.

Go and visit them, either anonymously or upfront.

Business competitors don’t necessarily have to be local to you. If you’re setting up as a wine merchant, then Sainsburys or Oddbins is as much a competitor as the wine merchant in the next market town.

At the very minimum level of market research, don’t even think about setting your own prices until you know what your competitors are charging.

SUPPLIERS

While you’re conducting your market research you can tackle suppliers at the same time. In compiling your supplier’s list, try to have two or three alternatives lined up. Never become too dependent on a single supplier in case they let you down.

As with everything, word of mouth is best. Failing that, check the internet and magazines aimed at your type of business, the Yellow Pages and other phone directories. Don’t be bashful about asking other businesses about their suppliers: they can only say no. But many will take it as a compliment rather than a threat because you are, in a roundabout way, praising them. So if you see a well-fitted deli or accessories shop, find out where they sourced the shelving or who did the design. Or if you admire the quality of tools the landscaper is using in the next-door garden, hop over the wall and ask him where he got them.

Good suppliers are also an invaluable source of market research information because they’ve probably been in your business for a long time and will have seen a lot of people come and go. Encourage them to chat and tell you all about it.

OTHER RESEARCH

There’s plenty of other more general research you can conduct from your desk. Find out about the general state of the business you’re going into – catering, tourism, crafts, alternative health, whatever. Look for the trends and check that it’s not in terminal decline. What’s tipped to be the next development or technique, the next must-have bit of equipment, the next fad?

The internet is the obvious starting point to look. But don’t rule out organisations like the high street banks which can be extremely knowledgeable about small businesses local to them, as well as being aware of the more general economic trends. Most have small business advisers. Banks are keen to attract new start-up business accounts (presumably because they hope to make pots of money out of them) and will have a bewildering range of services and products to tempt you. So go along and find out what they can do for you. If they want your account, then make them help you do your homework first. And don’t overlook libraries. They still do exist in the age of the internet, and very useful they can be too. Many still have excellent reference sections.

IF YOU’RE REALLY SERIOUS

If you’re determined to do some really thorough market research, then there are many organisations out there which follow consumer and economic trends and publish endless reports, statistics and analysis. You’ll have to pay for a lot of the good material, and for the majority of people starting out on a small rural business career it won’t be worth it.

However, if you do want to try, you could start with an organisation like Mintel which focuses on consumer goods and trends. Its website address is www.mintel.com. Otherwise do an internet search and you’ll have ample choice.

ONGOING RESEARCH

Market research doesn’t stop dead on your first day of trading: it’s a continuing process. Nothing ever stands still, least of all fickle consumer demand. You need constant research in order to anticipate new trends and to make sure you never get left behind.

You don’t have to take to the streets every six months armed with a new questionnaire unless you really want to. Instead:

• Read all websites, magazines and literature relevant to your business.
• Talk to suppliers who’ll know what your competitors are up to.
• Keep in touch with any trade or specialist association in your field.

Existing clients and customers

The client base is hugely valuable for market research purposes. Your customers have already used your product or service so they’ll have a view worth hearing. Also, loyal and regular customers will begin to feel they have a stake in your business, especially if they’ve been with you from the beginning, and won’t hold back if they think you’re doing something wrong.

Ask them:

• Why were they interested in the first place.
• What they think of your product or service now that they’ve used it a few times.
• What they think about the pricing. Too expensive. Value for money.
• What they think you could improve on.
• What other things they think you should be doing (new lines, new services).

TRADING STANDARDS

At about this stage, while you’re thinking in detail about your new product, you may need to speak to your local authority’s trading standards department. This is especially relevant if you’re making anything that has a safety element or fire risk, such as upholstered goods or clothing. If so, your product will be checked to make sure it meets the appropriate regulations.