Don’t do everything yourself.

It is not surprising that market research can be very time consuming. Your company may need to engage with tens (if not hundreds) of potential customers, perform online surveys, conduct focus groups, demonstrate prototypes etc. Small businesses often do not have sufficient internal capacity to undertake such activities.

Once you identified key assumptions to be tested as part of your market research consider finding people who can help you talk to your target customers, perform interviews or use other market research methods. If you have a limited budget, you can find a student intern studying business or marketing who would work with you.

Market research goes first

Do your market research before undertaking activities related to research, product design and manufacturing. There are few reasons to prioritise market research over some other activities. First, your market research would determine if there is interest in the new product. Insights from your potential customers would drive other product development activities in your organisation and help define your project priorities. Second, market research is often much cheaper than research and manufacturing. Who would want to invest $100,000 to design a new product to then discover that the product is not viable?

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You should also perform own due diligence as many business owners want to sell their business because they anticipate unfavorable conditions in the future or because there are some fundamental issues with the business. Make sure that you fully investigate the business and assess its future potential.

When making due diligence ask a lot of questions regarding various aspects of an existing business. Some basic questions may include: Why is the business for sale? What is the business model? What kind of reputation does the business have currently and what is the business’ client base. You will need to carefully review all financial records and understand existing contractual obligations. Using services of a solicitor and an accountant can be helpful in finalizing your evaluation and purchase of the business.

Our company can provide independent review of a business that you consider for investment. We will assess products or services, market, competition, operations and can survey existing customer base.

It is likely that you’ll be making certain changes to the business after acquisition. In case if you are looking to secure a loan or other form of investment it is advisable that at least some sections of a business plan, if not an entire plan, are prepared. Include the business plan with your loan proposal based on what you expect the business will accomplish under your ownership.  As part of your business planning, you may decide to change business’ specific mission and objectives, sales focus, management team, financial forecasts.  Your banker will want to know that you have a viable business plan for operating the business that you are acquiring. For example, if you will be changing the financial structure of the business, this can have major impact on your company. That is why the financial plan is especially important.  Your lender will want to know that the business can be profitable under your financial proposal.

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