By Will Thomas, Marketest
With half of all UK startups failing within their first five years, an important question to address is why are survival rates so low? A lot of the blame tends to be placed on the UK tax system, the lack of bank lending and the high costs of running a business — these are all factors that business owners simply cannot control.
There are, however, things an entrepreneur can do before launching their startup in order to increase their survival chances.
Before shifting into high gear and launching your new business, it is absolutely essential that you do your homework. If not, you may be destined to failure from the beginning, and you won’t just have the tax system and lack of bank lending to blame!
You must determine whether or not there really is a market for your product or service and on top of that, you need to work out what, if any, fine-tuning is needed. How does an entrepreneur find this information out? The answer is market research.
Market research gives you the data needed to develop a marketing plan that works for you. You must identify the segments of the market that you need to target. Think of it as an investment – doing research before you launch will save you money in the long run.
There are two main methods of collecting information:
Primary research involves gathering new data that has not been collected before.
Secondary research involves gathering existing data that has already been produced. This method can provide an outline to a research topic but may not be able to cover your exact research problem and often requires further, primary research.
There are two types of data that you can gather:
Quantitative data is factual information in numerical form which can be used to construct graphs and tables of raw data. Quantitative research is about asking people for their opinions in a structured way in order to produce hard facts and statistics to guide you.
Closed questions on consumer surveys are an example of quantitative research e.g. ‘yes’, ‘no’ answers.
After collecting the data, you have to collate it and analyse it. This can be a specialist task in order to draw conclusions from the findings and see how different groups have responded – you may be best off using a market research company. A simple survey can be very effective and highly revealing — a perfect way for you to test your market before entering it!
Qualitative data provides reasoning for consumer actions, opinions, wants and needs. This type of data is not in numerical form and can be harder to analyse than quantitative data.
Focus groups are the best example of qualitative research e.g. a group of people can be assembled to participate in a discussion about a product before it is launched. Qualitative data is collected through open questions, allowing participants to talk in depth and choose their own words. This helps you to develop a real understanding of how participants feel towards a product.
If you want your business to survive you must understand and meet the requirements of your customers. Detailed market research is therefore an essential thing to do before launching your startup and not doing so may lead to your business being a part of the 50% that fail within their first 5 years.