The foundation of every successful business is a rock-solid idea. But how do you know if your new business idea is any good? Your best friend might think it's brilliant, but what if your customers think it's lousy? So before you invest a single penny in your new business, you need to conduct market research.
A common problem for new businesses is that they overestimate the size of their potential market. All products and services have one or more target demographics. An automatic shoe buffer isn't going to sell well with 12- to 24-year-old females. It would be much smarter to target 50- to 65-year-old men. Go to the U.S. Census Bureau Web site and see how many older men with salaries above $75,000 a year (more likely to wear dress shoes daily) live in your area. Now you have a realistic projection of the size of your target market.
Other good resources for free market research are trade shows and expositions [source: Entrepreneur]. Take a prototype of your shoe buffer to a technology or housewares show and solicit feedback from attendees and vendors.
Pay particular attention to negative feedback. One common mistake of entrepreneurs is to filter out everything but the most positive comments. It will cost you much less time and money to fix a problem in the prototype stage than to make changes when you're already in production.