WOULDN’T IT BE NICE IF…?
Goal:
Evaluate a business opportunity.
What to do:
Your wealthy aunt owns commercial real estate all over town. When one of her tenants, a nonalcoholic beverage company, goes bankrupt, your aunt acquires the company’s bottling equipment. She wants to help you start your own business. Because you’re her favorite, she’s willing to give you the space lease-free for the first year, and will sell you the equipment for just $1. You drink a lot of different kinds of beverages, so you’re intrigued.
Having read this chapter, you realize you need to determine the feasibility of a business before you plunge in.
1. Make a list of the positive attributes of this opportunity.
2. What kinds of nonalcoholic beverages might you be interested in making?
3. What do you think might make this type of beverage succeed? Are there examples of this type of beverage selling well already?
4. Who are your competitors? How would you rate how strong your competition is?
5. Your aunt is giving you a head start, but you’ll still need funds to buy ingredients, bottles, and packaging, and to do marketing, employ staff, and pay utilities. Very roughly, how much money do you think you’ll need to get started?
CHAPTER
3
Basic Business Research
Primary vs. secondary research
Quantitative vs. qualitative research
Luxury Doesn’t Just Happen: The Ritz-Carlton Hotel Company
learning objectives
In this chapter, you’ll learn how to:
■ Conduct business research for a new or existing company
■ Distinguish between primary and secondary research
■ Distinguish between quantitative and qualitative research
■ Determine which key issues to look for when conducting industry research
■ Determine which key issues to look for when conducting market research
■ Conduct basic primary market research, through surveys and interviews with prospective customers
■ Determine which key issues to look for when researching major competitors
■ Develop research questions that will help garner the best data
■ Select the most relevant data
■ Organize the vast amounts of data involved in business research
Why Research Is Important
Knowledge is power, especially for entrepreneurs or aspiring entrepreneurs. Entrepreneurs are, naturally, enthusiastic about their ideas. With accurate information at your fingertips, you can better judge whether your ideas will likely bear fruit—and whether the opportunity you’ve identified is a viable one.
The only way to get this information is through research. The word “research” doesn’t have to be frightening. Research can be as simple as interviewing people who are potential customers or talking with other entrepreneurs who’ve already done what you hope to do. Perhaps it involves looking up facts about your particular industry online. It’s a good idea to find out what’s going on in your chosen field or industry. What are the trends? What’s hot and what’s not?
Think of research as a reality check that will align your vision with what’s actually happening in the world. Research helps you identify opportunities, set prices, adjust your marketing, and improve your product or service.
You don’t need to be exhaustive in your research efforts; it’s neither necessary nor possible. You’ll merely look for information that will answer key questions about the particular opportunity you have identified. At the same time, your research must be thorough enough to give you insight into whether you should proceed along the path you have chosen, or investigate other options.
Types of Business Research
How will you go about gathering the information you need? Will you conduct your own research, or will you rely on information that’s already out there? Will that research be based on cold, hard numbers and facts, or will it come from opinions and observations? Before you get started on your research efforts, it’s useful to understand the meanings of some key research terms.
Primary vs. secondary research
Two of the basic types of research available to any business information seeker are primary and secondary.
■ Primary research. Original research done by collecting data directly, typically from