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Market research is an essential part of any business plan, whether a fledgling business or a multinational organisation. Knowing that there is a sustainable market for your product and understanding what your audience expects from you is vital to a successful business launch. Market research can generally be split into two categories; primary and secondary, and during this article I will explain both and discuss their respective merits and appropriate uses.

Secondary Research

Secondary research makes use of existing data from whatever sources are available. There are government censuses, Mintel surveys, and many private market research agencies that allow access to their data; some of it for free. It can be hugely advantageous, especially as a place to begin. Secondary research more often than not, proves to be a solid base on which to develop your own primary research. It plays the same role as research in general does to your product launch, and should be seen as just as vital. Also, this is of course far cheaper and generally quicker than creating your own research from scratch.

The negatives

The other side of that coin is that you have neither picked the panel to suit your exact needs, nor the questions. It is feasible that you can find some research somewhere that corresponds to what you are trying to achieve but it will almost certainly require some tweaking, and will not necessarily be the people you wish to interrogate; the use of qualitative research designed by someone else will almost certainly make the target specialised away from your goals. Another main issue with secondary research is that by the time it reaches you it’s often outdated; markets change so quickly in business that the only way to be truly current is through new research. This is not to rubbish the quality of secondary research.

Primary Research

Primary research is, essentially, the creation of your own research, whether a question that you ask to your friends and family or a survey put together alongside an agency and administered to a wide panel. Primary research will instantly let you feel more in control of your project; and that is the exact position you will find yourself in. You choose the questions and select your panel through qualitative research, allowing you detailed responses from individuals. You decide how, when and where your research is administered. You can ensure that your research is focussed: the number of participants and their backgrounds, the number and nature of the questions, the amount of time that your survey is available. This is the most accurate way to research a market sector that is specific to you and your product.

The down side

It is of course, more expensive, whether financially or on your time. If performing primary research alone it will take a lot of time, refining and will need some experience in producing quality questionnaires. It will also take time for your questionnaire to be completed if you don’t have direct access to a ready panel. Most of this can be avoided by using an agency, but at a cost higher than performing your research alone.

So what’s the best option?

Neither type of research will take you to your goal alone; however, a combination of the two will give you all the information you need. Using primary research alone, without first seeing what has or has not worked for other companies and possibly missing out on important data from research that you couldn’t afford to perform yourself, is likely to lead to irrelevant questions or missed opportunities. At the same time, relying solely on secondary research is likely to leave you with answers that are vague or inappropriate to your specific audience. The two compliment each other well, and when used in conjunction will give you a well rounded and accurate portrayal of the needs and opinions of your market sector.

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It’s not easy starting up a business. From initially having the courage to realise your idea, to seeking advice and then facing the endless scrutiny that surrounds your new business – there is a certain amount of thick-skin needed to even make it to the starting line. In this video, Eden Project co-founder Tim Smit talks about the qualities needed to survive in the tough world of entrepreneurship.

Smit talks of process and creativity. As an entrepreneur, how did you manage to stay positive while dealing with the range of skills needed in starting up a business?

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My first blog post on setting up a business at home proved popular – I thought I would follow it up with some tips on the regulatory side to working from home.

  1. Decide whether to trade as a sole trader or to set up a limited company.
  2. Incorporate a company using a formation agent (e.g. @UKplc) or an accountant. This is easy and you should not have to pay more than £150 – including disbursements.
  3. As a sole trader, you will need to register as self employed with HM Revenue & Customs.
  4. You will be able to offset a portion of your home costs against your profits. This is a great way of reducing tax.
  5. VAT registration – this is compulsory if your sales are greater than £70,000. You can register voluntarily if wish to reclaim VAT suffered on purchases. It’s a complex area and you should seek the advice of an accountant. Make sure your accountant is set up to register and file returns online for you.
  6. PAYE registration – you will need to do this if you plan to pay yourself and/or your staff a salary. Again, use an accountant and make sure that the accountant is set up to make all the necessary submissions online.
  7. Home insurance – make sure that your building and contents policy covers you for working from home. Similarly, make sure that your car insurance covers business use. There should be no/minimal extra cost.
  8. Liability insurance – if you need it, you might want to make sure that it covers Public Liability Insurance at your home, particularly if you plan to regularly host clients, suppliers and/or staff.
  9. Business Rates – there is an element of scale to consider here – you on a laptop on the sofa is not a problem. Five staff turning up every day to work in the spare-room may be. If in doubt, check out your local council’s position.
  10. Registered Office – if you set up a company, you will need to have an “official” address. If you use your home address, you will need to display the company name outside your front door. The sign can be business card size. Alternatively, use your accountant or virtual office service.
  11. Make a note in your diary of the dates and deadlines that matter – particularly on the submission of official documents – because you get fined if you are late.

I’m always looking for new topics to blog about so if you have any suggestions – do get in touch or leave a comment below.

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It’s official 2009 could be one of the hardest years ever for any business.

Business will be tough and attracting customers will be a challenge. Whilst you may not be able to influence how much customers spend with you, one thing you can do is to CONTROL YOUR COSTS.

So lets get back to some basics about costs. There are two types of costs

VARIABLE and FIXED.

Variable costs change in relation to the amount you sell or supply. Examples would be the stock for the business, packaging, postage or delivery costs etc.

Fixed costs remain constant and do not change regardless of your level of sales. Examples would be the rent you pay on your premises, electricity bills, your accountants fees, bank charges and so on.

So how can you control your costs?

The very first thing to do is to write down all of your costs and to decide if they are fixed or variable.

This is a good exercise as it will establish exactly how much you are spending each day / week / month.

Once you have established all of your costs the next task is to reduce them – yes it can be done and it would not be unrealistic to set a target of between 10% to 20%.

Remember, anything saved on costs immediately means more profit for your business.

Reducing Variable Costs

Lets start with the variable ones first as these can be changed quickly and so should have an immediate benefit on your profit.

Have a look at the list.

  • What can you reduce or eliminate?
  • What can you re-negotiate, put out to tender or shop around for a better deal. It is a buyers market at the moment so don’t be afraid to ask. Barter and negotiate hard.
  • Can you get discounts by buying in bulk?

If a supplier does not offer a discount – ask for one! You will be surprised at what you can achieve if you ask. So be ruthless and say you will go elsewhere if the price is not reduced.

Examples of where savings can be made are:

  • send invoices and delivery notes by email instead of printing them or only provide them if requested. This saves on paper, printing and postage costs.
  • use less packaging for products or charge for none essential items eg carrier bags.

Reducing Fixed Costs

These may take a little more time to alter but can actually result in higher savings. So they should not be ignored.

The target here should be to reduce all costs. So challenge everything you are spending. You may have to put some effort in but your hard work will result in huge savings.

Examples of where you can make savings:

  • on rent, ask your landlord for a rent reduction or a rent holiday
  • shop around for cheap utilities such as electricity and gas
  • change banks regularly to take advantage of free banking periods
  • shop around for savings on professional fees eg. accounting fees. By paying these monthly some accountants will provide a fixed fee service.
  • change your business telephone, internet or broadband packages to take advantage of special deals.

Remember:

  • be harsh
  • be ruthless
  • negotiate hard
  • challenge all fixed costs
  • do not be complacent

Control your costs and Beat the Credit Crunch

 
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In the last post I raised the idea that hearing about random aspects of your new business start-up is not necessarily what the customer wants.

Which depot the product has come from, or indeed difficulties in setting the service up, are unlikely to be helpful features! Giving unnecessary background info could even be detrimental to selling your fantastic product/service – loose lips sink ships, as they say.

The worst examples of this type tend to be around those features that aren’t developed. You know the ones: “our delivery service isn’t quite set up currently”, or “24hr functionality wasn’t ready for the launch date” etc. As a customer, isn’t it great to hear about something that you want, but can’t have yet? Of course not!

Simple steps to fix

  1. Ask questions about them, their use & their situation
  2. Then talk about what they can have (not what they can’t)
  3. Get to the sales decision, and regardless of the outcome
  4. NOW you can let them know about upcoming developments.

If they’ve already purchased, great! If not, you’ve made them aware for future reference. As a brief aside it’s probably a good idea in this case to get the customers details and contact him when the service he wants is up and running!

Okay so in truth, I’m not really saying don’t talk about your business at all. Local people are often interested in local businesses, especially new ones, and it IS a good way to build your relationship with your customers. Chatting enthusiastically about yourself and your business is great for developing that rapport.

The real point I’m trying to make here is to differentiate between background chit chat (optional) and the sales process that you will need to walk your customer through to solve their problem (obligatory!)

ACTION: Does this relate to you & your business? Based on the above, what will you STOP doing, START doing and CONTINUE doing today?

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Having a business idea and a great intention to make it succeed is half the battle. Another aspect in making your business the best it can possibly be from day one involves an element of the marketing mix. I am talking about what for many is the fun part, naming your business.

Giving your business the right name can often be the difference between success and failure. It should be a creative and, on the whole, enjoyable process but you do need to get it 100% right. First impressions will win you business, friends and so much more. Therefore, putting that extra bit of effort and exhausting all possible avenues when coming up with the perfect name for your business is well worth it.

As a start-up, you may have little more than the name of your business to attract new customers – does you business name say great things of you and your products or services? Of course you want your name to stand out from the crowd and injecting an element of personality into the name can break down barriers in an instant but I recommend taking a pragmatic and objective approach to naming your business. Just because it sounds great to you does not guarantee that the majority are in complete agreement.

In the modern world of commerce, it is essential to secure web positing with your chosen name too. Before you appoint a business name that works well on a shop front or letter-head, does it work well on the web also? Check for the availability of the domain or if similar names are already being used and what they offer.

Learning from other people’s mistakes will demonstrate just why you need to think your business name through and check it several times over. Some titillating examples can be found here.

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BRAVE, the Bristol enterprise agency, report an encouraging level of interest in their introductory course ‘Thinking about business?’ The next session for this seminar is a sell-out.

Yet everywhere there are the signs of a downturn:

  • In the high street there are half price offers… retailers desperate to keep the tills ringing.
  • An architect friend, who traditionally relies on word of mouth for new business, says he has no prospect of any work at all. People just can’t afford that kitchen extension.
  • And the guy who works from 7AM to 9PM to run our corner shop has finally thrown in the towel. Too many people are now unable to justify the premium he charges for convenience, me included.

The South West of England has a high level of small businesses, compared to much of the country. Could it be that the people signing up to BRAVE’s starter course reflect something in the water round these parts? Are they shrugging aside the doom and gloom and just getting on with their entrepreneurial dreams?

Or, as a more cynical friend suggested, are the attendees the recently redundant, now researching alternative ways to make a living?

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