ABA Family Legal Guide

Forming and Operating a Small Business

Starting a Business

What does market research involve?

The failure rate for new businesses is high. Before you commit yourself and your hard-earned money, determine whether a market exists for your service or product. Have similar businesses in this area failed? Can you determine why? If a market does exist for what you're thinking of offering, what's the best way to exploit it?

Use the resources of your library and the Internet to find out as much at you can about the industry/service you're interested in. Be especially concerned with actual and potential competitors--who are they, what are their strong points/weaknesses, do you feel you have an edge on them?

One important issue is the location of the business. Obviously, you don't want to open up a greeting card shop across the street from another greeting card shop in a small town. But two greeting card stores located in different parts of a major shopping center might both be successful. A legal issue is whether there are any legal restrictions (for example, exclusivity provisions in the shopping center leases) that might limit your location.

In addition, if your market is specialized or has particular needs, market research will help you to understand what your buyers want and how to communicate that your new business can meet that need.