Most new business owners accept that they should do some amount of research before they open a new business. However they usually do not do enough research or they do it improperly.

Most new business owners limit themselves to secondary research such as going to to the library and searching over the Internet. Some may even conduct primary research by talking to a few business people in the industry. Why then do so many new businesses fail within the first few years of opening or they run into difficulty soon after start-up.?

Two main reasons are that people tend to over estimate their market and under estimate their competition. Over estimating can happen when the target market includes all those who potentially need the product rather than just those who need the product and are willing to pay for it. Under estimating the competition can happen when you assume that the competitors’ customers will readily switch over to your products once you open for business.

In considering franchises, most people tend to make misinformed assumptions such as the key to making money is simply buying into a good franchise system. All franchise systems have a mix of profitable and unprofitable locations; the better franchises just have a much higher proportion of profitable units. What many people overlook is that market area and personal skills are equally important to the success of the franchise as the brand name. With an independent business the market area and personal skills are even more important.

Market research needs to be done in a professional manner to ensure accurate results. Too many entrepreneurs perform token research to feel good about their preconceived ideas. Market Research should not be a “feel good” exercise that totals up all the customers that should or might buy your product/service some day in the future. Its main purpose is to identify who your market is, how large it is and how it behaves. Target your most avid purchasers and let your product/service sell itself.

Etzler Franchise Consulting has the resources to conduct both primary and secondary research on just about any type of small business including retail, commercial and food service operations, business and consumer services. With a market research background, Mr. Etzler can properly conduct your research and assess the results.