The Importance of Research Before Creating Your Company

It is a well know fact, that many recently formed companies go into administration within the first two years of company formation. 

This is a consequence of many factors – poor planning, badly managed cash flow, economic conditions – however, one of the main reasons many newly formed companies fail is due to poor market research.

 It could be that consumer demand is simply not there or an existing company already offers a similar proposition to yours, either way, costly mistakes can be avoided if you take a moment to consider and research your idea before you try and implement them.
Not only will researching your product or service highlight any challenges or flaws in your original idea, this process will also help you identify ways in which your business concept can be improved and help you define elements it is currently missing. Ultimately, these efforts will provide you with all the information you need to give your company every possible chance of success.
 

While large corporations dedicate a huge amount of resources into market research before launching a new product or service, there are still cost-effective ways any recent company formation can get a solid idea of the market and any barriers to entry.

 Begin with these simple steps:
 

1. Use the resources already available to you.

 If you are forming your own company, the chances are you will already have a level of experience in your chosen sector and that you know people who also do. Ask them what they think of your idea, the challenges they think you may face and how you may improve. 
 

2. Look at your potential customers.

 Research who you think will buy your product or service. When considering a new product launch, the hugely successful drinks company Innocent, decided to the ignore traditional and complex market research methods. Instead, they simply went where they thought their potential customers may be and asked them for their opinion

3. How do you feel?

 Starting your own company is a lot of hard work and requires absolute passion and confidence in your proposition. If you don’t have that initially, then you should take a fresh look at your business idea and try to understand why not.