Many startup founders look at market research as a costly and painful process, but it’s an essential step in launching a business. Without scoping out the market beforehand, you’re trying to hit a target that you can’t see. Fortunately, there are some efficient and inexpensive ways to get the information you need.

The first step is to check out the competition - look at reviews and testimonials of other companies in your field and see what their customers love and hate about them. Then dig into the financial side using tools like Mattermark and AngelList. Finally, and most critically, talk to your potential customers directly.

If you know where to look, you can find a surprising amount of information online about other companies in your industry. But that’s no substitute for direct feedback from the people you’re hoping will use your product or services. That’s how you find out what they want from a company like yours.

What Do You Need To Know?

Many founders find it hard to get much out of market research. And the most common reason is that they don’t really know what they’re looking for.

If what you really want is to convince yourself that you have a great idea, it’s easy to do that while pretending you’re doing market research. You just ask a bunch of trusted friends and colleagues for feedback on your startup concept.

Chances are, you’ll pick the kind of people that you already think will get excited about your idea.

A certain amount of that isn’t a bad thing. It can help you build your confidence and enthusiasm, and the people you chat with might offer some useful ideas or ask some insightful questions.

However, good market research can and should achieve more than helping you psych yourself up.

Some other important goals include:

  • Getting a realistic idea of what success in your industry looks like
  • Showing proof of concept to potential investors
  • Understanding what your company will be worth
  • Learning how to reach a wider customer base

All of these goals will require you to look beyond your personal network.

Fortunately, there are ways to do this without breaking the bank on consulting services. Here are some efficient ways to conduct market research as you prepare to launch your company.

Scope Out Your Competitors

You can sometimes find out more from your foes than your friends.

No, that doesn’t mean asking the competition for advice. It means taking a look at what people are saying about them.

Look for online reviews and testimonials for other companies in your industry, to find out what people love and hate about them.

A simple way to get started is to look at their Facebook or Google pages, and read the comments from customers. What are the positives that happy users emphasize? What problems do dissatisfied customers call out?

This is a great way to start finding out what features make a company popular in your field.

Product Hunt is a great resource - it shows user ratings and comments for all kinds of tech and entertainment products, with comments and rankings from the user community.

Take a look at the highest- and lowest-ranked products, and see what differentiates them.

Do customers seem to prefer a simple UI or a huge dashboard with lots of settings to tweak? Do the popular products have tons of integrations with other apps? Are lots of customers complaining about response times for quote requests?

These kinds of insights can be extremely valuable in helping you understand what people are looking for from a product like yours. And this kind of analysis is quick, fairly painless, and totally free.

Run The Numbers

Nowadays, there’s a huge amount of publicly available information about industry trends, market segmentation, consumer spending, and other useful information.

Let’s say your company is focused on helping people buy and sell homes more efficiently.

Some quick Googling will return tons of published reports and articles on trends in the real estate market, statistics on homeownership, typical commissions for brokers, and so on.

All of this data will help you define your potential market, so that you can create a realistic business plan or make a convincing pitch to your investors.

Speaking of investors, there’s also lots of information online that can help you valuate your company.

Once again, look to your competitors. AngelList can be a fantastic resource for this. Lots of companies will post information about how much capital they’ve raised and who their investors are.

Some even share pitch decks, which provide even more detailed intel.

If you have an extremely niche startup concept, you may have to dig a little harder to find comparable companies. But you should still be able to find people working in a similar industry or selling to similar market demographics.

That kind of information can all go into your presentations to investors.

Mattermark is another great place to look. It’s a huge repository of business research, and unlike AngelList, it’s not just focused on startups. You can find information on long-established companies like Sony or Coca-Cola.

This makes it especially useful if you’re selling a physical product or doing B2B sales.

And Mattermark offers a free trial option so you can get a feel for its capabilities before you commit.

Talk To Strangers

The most important way to find out what people want from your company is to ask them.

Have conversations with your customers - or, if you don’t have customers yet, with people in the market segments you’re targeting. Ask questions about what features they want, or which elements of the product are off-putting.

This prospect can be intimidating for founders, but it’s key to figuring out how you can expand your customer base. And it doesn’t have to mean paid focus groups. Informal one-on-one conversations, or small-group sessions, can reveal a lot.

The good news is that people are often more willing to open up about their likes and dislikes than you might expect. Get them talking about the problems that your product is intended to solve, and chances are they’ll tell you what’s wrong and right about the solutions they’ve tried already.

The Bottom Line

Above all, make sure that your market research flows from the goals you’re aiming for.

If you want to show potential partners the validity of your idea, search the web for reviews and data on competitors that do something similar. If you want to find out how much funding to shoot for, scour AngelList and Mattermark for investment data.

And if you want to figure out how to break into new areas of the market, do all of the above - but also discuss your product with the people you’re hoping will use it.

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