How to Research a Business Idea

If you have a great idea for a new business of your own, research will help you determine if your idea is worth pursuing. You need to determine if your business idea has the potential for profit and long-term success. With careful planning and research, you can decide if your idea is worthwhile.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Accountant and attorney
• Money to invest
• Time for research

1. Brainstorm different ideas. This can be as simple as scribbling down thoughts as to what type of business you are interested in starting. Organize your ideas into categories and then narrow down your list to few choices. After you have an idea of your direction you can start the research process.
2. Head to the library, where you'll find newspapers, magazines and books on the kind of business you're considering. Look for information from business journals, industry associations and consumer publications. Find out as much information as possible regarding the industry, including regulations and licensing requirements.
3. Research your competitors. Locate different companies that would be considered competitors. What are they doing right? What could they be doing better? Talk to their customers—find out why they choose that particular business. Ask what they like and dislike about the business. Talk to the competitors directly. Many established businesses are willing to lend advice to other entrepreneurs.
4. Create a profile of your potential customer. Who will buy your product or use your services? Try to figure out the demographic of your customers—age, gender, marital status, income and lifestyle.
5. Utilize the Internet. Look for publications about starting a business in the area of your choice. Read company histories and financial information of similar businesses. Do you have the capital to start such a venture? Join discussion boards. On the Internet, find message boards or forums related to the type of business you are researching. Ask more questions of current business owners and customers.
6. Outline start-up costs. Financing is the biggest component in starting a new business. Estimate the start-up costs and monthly maintenance expenditures of running your business.
7. Write a business plan which outlines the objectives and goals of your business.

Tips & Warnings

• Get professional advice. Before signing any contracts or making any major decisions, contact a lawyer and/or accountant.