For Theo Paphitis, research is the key:
In my opinion one of the biggest reasons why people actually fail in business is not because they’re lazy or they didn’t have a good idea. It’s because they’ve carried out their research, they’ve done everything right, but they actually haven’t bothered to try and listen to their research. Because they had a good idea, and they were never going to let the research and the facts get in the way of a good idea. That will kill you. That’s why most businesses fail in the early years.
Now, if you have a good idea, the first thing you’ve got to do is do your research to find out where there is a market for your product or your idea or your services. Doing your research is not asking your family or your friends, because they’ll always say really nice things to you, oh fantastic idea, we’re so pleased for you. Actually they’re not doing you any favours; they need to tell you the truth. So you need to do independent research. And then you’ve got to understand that research.
Fiona Ellis-Chadwick says it's important to do your market research - and listen to what it tells you:
Market research is important for reducing risk. If you think about it, we’re currently operating in what’s the global village. So actually we can see these markets. From an entrepreneur’s point of view it’s great, because we can see all these opportunities, and we can almost touch them. But before we do touch them it’s important that we set about doing some research to reduce the risk.
So there’s basically three tenets of market research. Number one is that it enables us to actually describe what the market looks like. So we can gather data which enables us to have facts and figures about sales, about the number of customers, the number of companies and the opportunities laying out the market that we might enter. The next platform is about diagnosing, so take Marmite for example.
They went out in the streets and they were gathering research, it might have looked like fun handing out sandwiches, but actually they were gathering data, and attempting to understand what the reaction would be to the launch of their product, so they were effectively diagnosing the market response. Now, if they'd have given it to me, that would have been great, I love Marmite, but that’s clearly not the case in India. So they’ve gone back and they’ve thought about how to reposition the product so that it is acceptable in the marketplace. So they’ve diagnosed the market response.
Now the next level is to predict, and so to predict how successful we’re going to be. So we've described the market, we've diagnosed it and now we can predict how our company is likely to perform. Market research can help us to identify new markets. It can help us build in existing markets. Probably most important though, it helps us with our strategic planning. And when we have gathered the data, we've analysed it, we then need to use it, and use it repeatedly. And we do need to remember to go back to collect more data. It’s not a one-off activity; it’s an ongoing activity. So market research will help us reduce the risk, will help us to be successful, but we do need to do it continuously.
Want to know more? The Open University Business School offers a course in Investigating Entrepreneurial Opportunities.