Leveraging Market Research for Small Business Owners: Entrepreneur MBA Podcast 2.5
Summary: According to David Steen from Orchid Black, small businesses that do some market research are the ones that have the best potential to grow. A lot of these same businesses are doing research via social media, marketing campaigns, and customer analysis. It has never been easier to learn more about your prospects and customers. David and Host Stephen Halasnik talk about how to get started and how to really get to a more in-depth level.
Today’s topic: Leveraging market research to drive strategic decisions and best practices
There is a myth out there that market research only happens with new businesses when they are just getting started. This isn’t true at all, and in fact, established businesses will spend vast quantities of time, money, and energy on market research. Any company, from start-up to established businesses, can and should be doing market research. Whether for new product development or to understand your existing customers, market research should be a big part of your strategy.
Market research can help improve the existing implementation of a business plan, help inform starting another business or allow the business owner to look at other avenues in the market. Companies might start with small issue problems, like “my sales team isn’t meeting its quota, can it help me with that?” to understanding an underlying bigger problem that has nothing to do with the sales team’s productivity. It might be that a product isn’t being sold in the right market, and that problem is interconnected with the other smaller problems. Market research can help identify the causes and therefore find a better more long-term solution.
From Data to Data-Driven Decision Making
Hiring the Right People to Do the Work
When it comes to customer engagement, the most important thing is to get the right people to actually do the work. Some market research or all of it can be done in-house. In some cases, the organization might have a business partner or someone in-house that is really good at market research and coming up with insightful. However, a lot of businesses, especially small businesses, don’t have that in their organization already. They might not have the money or resources to hire a full-time research employee and that is where finding a consultant could really help.
Some businesses might also carry internal bias in their research from existing company priorities. For example, if someone is tasked with a research project and knows of a company’s priority to launch a product, then they might feel pressured to apply that bias to the research they are conducting. This could keep the researcher from looking at it from another lens and the research might not be as comprehensive as it should be. That’s why it is valuable to hire a third-party or third set of eyes for unbiased, comprehensive research to drive the right decision.
A good idea is to find people with the right skills to understand how online surveys work, what pain points are, how to really take advantage of google analytics, and understanding google trends. People that know how to gather and synthesize data, research the whole market, and then connect all the dots to leverage that market research into something profitable.
Gathering and Synthesizing the Data
To collect data, it’s important to gather both primary and secondary research. Primary data is speaking directly to people whether it’s competitors, customers, or prospects. Basically, connecting with the key stakeholders and/or putting together a focus group in order to ask questions or make observations that aren’t possible such as through Google Search. This could also include gathering feedback from all aspects of the company itself, enabling all employees to provide their feedback so it’s not just a top-down approach. Secondary research is gathering information and data from Google, articles, databases, surveys, and industry reports. Both primary research and secondary research are necessary for market research to meet the type of research necessary.
David supports staying critical of any data gathered. It’s a good practice when researching to be wary of the person who wrote the article, critique what their agenda might be, or if they might have any biases. Many articles or blogs online use various outside sources or quotes, pointing to some research in order to draw their own conclusions. When putting articles and content online, many groups have an internal agenda of their own to sell a product or service. This is why cross-referencing primary and secondary data is so important. Primary data and checking in on what other people are saying can help a business verify the information. If the source itself comes from a well-known and credible name, that is also a good sign but can lend itself to biases too.
When skeptical of an article or survey, understanding the basic data points and basic research principles can really help with verifying its accuracy. For example, when looking at a survey the reader should ask questions like:
- What is the sample size?
- How is this sample size truly representative of the sector?
- What kind of questions were asked?
Even the survey tool and setup used can skew the conclusions. Using tools like Surveymonkey can be a low-cost way of gathering data directly from a target audience, however, the questions asked and the experience of the user could sway the responses. Make sure the survey itself is easy to use and that it is going to the right audiences. For example, if customer feedback on a new product is important, send the survey to the right target customers for a true representation of the target market and don’t ask questions that would skew the user’s view of the product one way or the other. Gathering accurate data either from outside or internal resources will give a realistic view during market research.
After gathering data from primary and secondary sources, the next step in the process is to take all the raw data and observations and synthesize that into known numbers, aiming for something actionable.
Connecting Specific Data to Whole Market Trends for Something Actionable
A Forbes article advises small business owners to “Think and Grow Big”. As mentioned previously, companies do not act within silos. They operate within that bigger market. Observing the whole market, rather than just specific research on that product or service, will give insights into trends in that market. Those insights give a look into the market’s behavior at that point in time. This is really important for small business owners fighting harder to compete with bigger companies that have more resources.
By comparing data with those trends, opportunities begin to present themselves. One example David used was that of a manufacturing company. The company might start producing less of one widget and more of another, suggesting a demand and shifting the market to something else. One would take that insight and see how it fits in the puzzle of the whole market instead of using a narrow lens of just that insight within that company. One could draw a conclusion with that narrow lens, but it could be wrong. By trying to figure out how that insight fits into the market as a whole will lead to a better conclusion.
Trade associations could also be a great place to look for trade wide data. The University of Oregon also notes that since trade associations represent members of that trade, they usually conduct their own market research and will at least release some of that data to the general public in press releases, articles, or blog content.
Market research is a big picture approach, looking for multiple types of opportunities. It not only helps with marketing strategy, which as Hubspot points out is typically a “plan for reaching a specific marketing-related goal (or goals) in a focused and achievable way”, but also can reveal new opportunities the company might not have thought of yet.
Leveraging Market Research
Data-driven decision-making takes the data gathered and synthesized and uses it to implement a change or strategy. David was once able to help a client sell at a higher value by using their data to create a road map and implement a new strategy making that company more valuable.
One of the most important things in general to David when leveraging Market Research is to document everything. Document the different strategies, everything that is done within the company, the decision-making processes, and any kind of collateral from the work that is done. Investors are going to ask questions like:
- Well, how did they get there?
- What was the line of thinking?
- Where is the work essentially?
It doesn’t have to be a hundred-page business plan, but there does need to be some sort of documentation. There needs to be a way to answer with:
- Here’s the data I collected.
- Here’s how I turned that into this knowledge or strategy.
- Here is why I’m doing what I’m doing.
- Here’s why I’m going into this segment.
- Here’s why I’m building this product.
David instructed that this isn’t just a document to tell a story to stakeholders or investors, but also a start to a living, breathing document where everyone can get on the same page. The process itself might keep the researcher from missing something by nature of documenting during that process and prompting a more thorough research process.
The pandemic in 2020 has been a game-changer to the different dynamics in the market, especially depending on the industry. Many companies are now worried about their bottom line. Especially small companies that were still growing and didn’t have as much cushion to fall back on. Those companies that were more retail and dependent on brick-and-mortar stores, regularly operating at a physical level now need to reassess everything as it all moves online. And the customers and their buying patterns have changed in major ways. By using data to drive decisions and strategies, companies can better adapt and implement strategies for the changing market.
After completing all the market research, it is vital that companies learn how to leverage that into something tangible. Evaluate what this market research could be used for.
- New Business Idea
- Better Buying Decisions
- Content Marketing
- New Marketing Plan
- Acquiring New Customers
- Social Media Marketing or Digital Marketing Strategy
All of the above are better informed by quality market research. Hiring the right people will help guide that conversation for leveraging market research.
3 Key Items From Speaking with David:
- Hire the right people.
- Compare specific data with market-wide trends for better actionable conclusions.
- Document the process and collaterals to better leverage market research.
About the Guest David Steen, Orchid Black
David has been a tech entrepreneur since the age of 13 and has spent the last 3 years working with high-growth tech startups and growth services. David, along with his team at Orchid Black, helps founder-led, tech-forward companies, grow fast and grow smart by leveraging an experienced team of operators. By partnering with clients in an aligned business model, Orchid Black takes on risk shoulder-to-shoulder with clients to drive long-term growth & value creation.
David Steen is an Associate Partner at Orchid Black. Orchid Black partners with companies to build smarter, better, game-changing businesses.
About The Host Stephen Halasnik, Financing Solutions
Stephen Halasnik is the host of the popular, The Entrepreneur MBA Podcast. The Entrepreneur MBA podcast’s purpose is to help small businesses get over the $10 million per year in revenue mark. Mr. Halasnik is the Co-founder and Managing Partner of Financing Solutions. Financing Solutions is a leading provider of Lines of Credit to small businesses and nonprofits
Mr. Halasnik is a graduate of Rutgers University and has an Executive Masters from the MIT Birthing of Giants Entrepreneurship program.Mr. Halasnik has started and built 6 companies over 25+ years with 2 of those businesses making the Inc 500/5000 fastest growing list. Mr. Halasnik is a best selling Amazon author on business and regularly tweets about his ideas about growing a business. You can also find Mr. Halasnik on youtube talking about Entrepreneurship.
Mr. Halasnik loves small business. He lives in New Jersey with his best friend, his wife Gina. Mr. Halasnik’s number one purpose is raising his two boys, Michael and Maxwell, to be good men.
About Financing Solutions
Financing Solutions small business financing product is a great alternative to a traditional bank line of credit because it costs nothing to set up, nothing until used, and when used, is inexpensive. The credit line requires no collateral and no personal guarantees.
Small businesses use their line of credit to help with emergencies or opportunities when cash flow is temporarily down (i.e. Payroll funding)
Please feel free to fill out the no-obligation, 2-minute business line of credit application here.The time to set up a credit line is when you don’t need it so that it is ready to be used, just in case.
Note: Financing Solutions donates 10% of its profits to various nonprofit charities