Determining a target market, particularly for products and services that have a broad potential customer base, is extremely difficult. Even if you firmly believe that your product or service could be used by any company in any industry at any stage, that’s likely not the case. This is why it’s imperative to do your market research.
The reality is that everyone will NOT use your product or service. And there is a good chance that what you have developed might not even meet the needs of your customers as perfectly as you imagined.
You may have convinced yourself that you don’t need to complete market research for a variety of reasons, and we’re here today to debunk every single one. We’re going to prove to you that investing some time into market research is a worthwhile investment in the success of your business.
-I don’t have time or money. This is true. As any CEO will tell you, time and money are your most precious resources. But let’s look at the balance of resource consumption: Imagine a founder of a software business that spent 6-9 months in pursuit of the financial services market simply because they had a few connections there, only to find that there was no true demand for their product in this space. The founder was surprised to find that the sales cycles were 3 times longer than they thought they would be. By the time the founder realized they were heading the business in the wrong direction, the business ran out of money and now the company doesn’t exist. Now the founder has all the time in the world, right?
-We have so many inquiries flooding our inboxes and a few initial contracts! We don’t need to do any market research to validate that they are real customers. Those inbound emails of excitement for your product are more than likely shiny balls that generally distract you from more important work at hand. They are a fools’ paradise. Remember that the “friends & family” round we all hear about in early stage capital conversations also applies to the first round of customers. They sign up because they love you. Not because they necessarily believe in you or need your product. Use these referrals to gather market research before your big launch. But don’t assume they actually ARE your target customer.
-I don’t know how to do market research. And lots of people also don’t know how to code software. But you figured it out. Or you found people on your team who could figure it out. This business function is equally critical to your success. Try harder.
-I just want to get started. You have a great product and you just can’t wait to get it out to the market. You’re talking to potential investors who want to see some traction, preferably in the form of contracts and revenue. The last thing you want to do is pause for 3 months for market research purposes. But really, you are succumbing to the pressure to act in an effort to find certainty. Even certainty that is potentially going to send you in the wrong direction and bankrupt your business. Uncertainty is hard. Certainty is easier. Warren Buffet famously said “The difference between successful people and really successful people is that really successful people say no to almost everything.” Resist the temptation to chase after those shiny balls. Sit in the discomfort of not knowing immediately who your target market is so that you can do the necessary work to figure it out.
-And here’s the biggest reason we bet you haven’t done it yet: I don’t want to know the results. Let’s face it. It’s hard to put your baby out there and ask for opinions. It’s uncomfortable. Vulnerable. It is easier to launch said baby on a website and sit in the sanctuary of disconnected business development email correspondence with your fingers crossed, hoping that those who stumble upon your website and sign up to try the software will be enough to sustain you through the next year. That is a risky game of entrepreneurial Russian roulette to play because you are afraid of what you might find out if you ask some hard questions. This is entrepreneurship. It is not for the faint of heart. Grow some thicker skin and get out there.