Why an Entrepreneur Must Have Business Research in the Past Before Creating a Business Plan

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Many entrepreneurs start with their passionate ideas before they understand the market they plan to enter. Therefore, your business model development, funding acquisition and first team recruitment should wait until you confirm that the market opportunity exists. The certainty emerges from business research rather than guesswork. Business plans that appear promising without market research have a high chance of failing to meet their targets. 

Adding factual evidence from market trends enables your plan to gain strength, which gives you an advantage over your competitors. The next time you plan your significant business steps, you need to verify that you have comprehensively researched the situation. Here are a few methods that demonstrate how proper business research turns your business plan from an uncertain gamble into a successful strategy in this competitive landscape.

Key Takeaways

• Business research validates your idea: The research connects your understanding of market needs with actual market wants decreasing business risks and ensures better chances for business success.
• It prevents costly mistakes: A poor market demand causes startups to fail at a rate of 35 percent. The execution of research allows you to discover audience preferences to prevent wasting money, time and resources on flawed initiatives.
• Essential for building a data-driven business plan: Research supplies data that helps establish prices and identify audiences and marketing channels, alongside predicting business expansion, while making your business plan reflect factual market data.
• It identifies strategic opportunities: Research provides insights into customers’ needs by showing their problems and competitor weaknesses as well as market developments that enable your business to enter new opportunities.
• Customer voices shape your strategy: Your product development will be successful when you listen to genuine customer feedback retrieved through surveys, online forums and product reviews.

What Is Business Research?

 

Business research consists of analyzing and gathering it for interpretation to enhance informed decisions. This business intelligence process turns arbitrary beliefs into strategic planning, while verifying that proposed business concepts match real market dynamics and vacant consumer requirements. Core business research functions to close the distance between what might appeal in the market versus actual customer demands. These help businesses gain insights that cover:

• Market trends and growth projections
• Consumer preferences and behaviors
• Competitor performance and strategic gaps
• Pricing strategies and revenue models
• Regulatory and financial requirements
• Dependent variable

For example, research enables you to determine key aspects about launching an eco-friendly packaging company through several examples, including:

• Researchers must determine the full market size and projected expansion during the upcoming 5–10 years.
• Your competitors’ market offerings together with their positioning strategies and monetary strategies
• Customers place different priorities on sustainability alongside affordability, aesthetics and convenience.
• The business needs to understand current environmental labels, waste management regulations and certifications required by law.

Such information enables your business plan to transition from speculative assumptions into proven facts. Presenting how your chosen approach supports each predicted outcome will strengthen your case, since external parties need this information.

Why Business Research Comes Before a Business Plan

 

Business research is the gathering, analysis, and interpretation of data to make better, more strategic decisions. It turns speculation into strategy, enabling a new idea to be assessed against real market and consumer needs. In essence, business research is the link between what you believe the market wants and what it truly craves.

• Helps understand the market demand: Business initiatives that deliver exceptional value do not always attract profitable markets. Business research enables you to verify whether people genuinely want your product or service. Understanding your target market’s needs, purchasing patterns and discomforts enables you to determine whether your business concept needs improvement or has promise.
• Identifies opportunities and gaps: Your competitors currently serve your target customers, yet fail to meet their expectations completely. Qualitative research methods enable you to detect their unmet needs. Potential customers experience problems that include slow delivery, difficulty using the website and limited functions and expensive pricing models.
• Reduces the risk of failure: According to CB Insights data, 35% of startups fail because they lack market demand. This single statistic demonstrates the essential role that research plays in business. Quantitative research methods play in enabling you to evaluate your presumptions and authenticate your strategies before making investments of time, energy, or capital.
• Provides data-driven direction for the plan: A business plan requires detailed information based on realistic data and factual evidence. Business research aims to supply the necessary information to develop that plan. Your business plan requires business research to develop pricing strategies, customer segments, forecast sales and determine marketing channels and expansion plans.

Key Areas to Research Before Planning

 

To develop a realistic business plan with targeted growth potential, you must investigate these five important areas during research.

1. Target Market and Audience

Customer segmentation goes beyond defining age or location. You should know what influences their decisions, their challenges in life, and how they address those challenges at this point. Research allows you to dive deeply into both demographic and psychographic data:

• What are their primary goals?
• How time-consuming each process is
• What do they find frustrating in the existing solutions?
• What prompts them to buy something?

2. Competitor Analysis

Competitor analysis provides some insight into the lay of the land you’re walking into. Analyzing direct and indirect competitors will help determine what best practices to implement and what failures to avoid. Investigate their marketing tactics, pricing structures, social proof, sales funnels, and customer service procedures. You can use tools such as SEMrush, BuzzSumo, and SimilarWeb to get insight into where they receive traffic, keywords they rank for, and which content generates the most engagement. The more you learn about your competitors, the better you can position yourself to serve your target audience.

3. Industry Trends

Industries evolve constantly. Be it the rise of AI tools, sustainability trends, or shifting consumer behavior post-pandemic, you need to know what’s changing in your industry. Being on the leading edge allows you the opportunity to provide a solution in time with demand in the future, not just the present. Relevant data from sources like Statista, McKinsey reports, Think With Google, and industry-specific white papers. Find out what business activity is expanding, what’s decreasing, and what technologies are accounting for transformation.

4. Legal and Financial Aspects

You need to familiarize yourself with the legal and financial implications of your own company before you open your doors for business. This might include taxes, permits, licenses, import/export rules, and any certifications you might need to stay compliant. Details like these are easily overlooked and can lead to fines, compliance delays, or legal exposure. Seek information on average startup costs, funding sources, grants and cash flow needs. Resources like the SBA’s small business guides and local government websites can help you get started.

5. Customer Pain Points and Needs

The key to building a solution that resonates is to know your customers’ pain points and unmet needs. This lets you know what frustrates them, what solutions they’ve tried, and what they wish existed. One step is to study reviews of products on Amazon, G2 and niche marketplaces. Prospect customers will let you know precisely which parts of existing products they loved and which parts they hated. These comments frequently pinpoint several issues that your business can solve more efficiently. These findings should be paired with way findings from customer support transcripts, online forums, or social listening tools to create an in-depth understanding of the real-world challenges your product line or service can fix. 

Simple Steps to Conduct Business Research

 

The ability to gather valuable insights does not require professional analyst training. Following these basic steps will enable you to collect data without experiencing anxiety.

Use Google and Industry Reports

When it comes to starting your business research, Google is an incredibly powerful tool. A couple of focused searches such as “emerging trends in [industry]” or “key challenges in [sector]” can immediately reveal a slew of articles, news items, blog posts and white papers that provide you with an understanding of the current market landscape. For more substantiated improvements, go to Scholar Google and obtain academic papers and data systems case studies with proven results.

Also, trusted research companies such as McKinsey & Company, Deloitte, IBISWorld, and Statista produce extensive reports filled with data, charts, and statistical analysis from the pros. Industry reports are particularly useful for validating your assumptions and making growth projections. Search for statistics on market size, emerging technologies, competitor rankings and consumer expectations. Keep track of what you find, and code these findings into themes.

Study Competitors’ Websites and Reviews

Knowing every detail about your competitors gives you an edge. Research their website layouts, messaging and tone, sales funnels and pricing strategies, customer testimonials/reviews, and product positioning. Notice what they’re getting right and where customers are left wanting. Tools like SimilarWeb, SEMrush, and BuiltWith can provide information such as traffic sources, SEO strategies, tech stacks, and social media platforms.

Now, check out sites like Yelp, Trustpilot, G2 and Amazon to read user reviews. Such reviews often call out common frustrations, or praise specific features. Are customers saying the same things over and over again about tricky interfaces, late shipping, or limited customer support? If so, you’re just discovering opportunities to do better. Create a spreadsheet to record your findings so that patterns emerge. By studying what’s already in the market and assessing customer satisfaction, you can determine where you can position your product so that it isn’t reinventing the wheel and instead offers a unique scope.

Conduct Surveys or Interviews

By connecting directly with your target market, you can extract valuable, firsthand insight on what they value, what irritates them, and how they make purchase decisions. Surveys are among the most effective methods of collecting large amounts of input. Use platforms like Typeform, Google Forms, or SurveyMonkey to create structured surveys with a combination of closed-ended (multiple choice) and open-ended questions. Analyze to identify common behaviors like frequency of purchase, loyalty to a particular brand or store, and the top three considerations when comparing similar products or services. For better response rates, keep it short and sweet.

Surveys also offer a quantitative depth that interviews don’t. Pick 5 to 10 respondents who fit your customer profile, and arrange 15-30 minute chats. You will usually find emotional triggers or friction points that inform decision-making. Write down patterns, contradictions, and surprises. Such customer insights can have a dramatic effect on how you write your copy, build your product and deliver your services in a natural environment.

Read Customer Feedback and Forums

One of the most under-appreciated yet highly effective methods of understanding your market is to read customer feedback, and navigate forums online. For example, look at product reviews on sites like Amazon, G2, Trustpilot, and Yelp. Read the reviews, both 5-star and 1-star, to see what customers love and what seems to annoy them over and over. Listen for patterns in the words they use; phrases that come up more than once may indicate shared expectations or points of pain. This will inform your messaging and product development.

Next, immerse yourself in online communities like Reddit (and associated industry-related subreddits), Quora, or specialized Facebook Groups. Listen to conversations about your market, competitors, or the problems your product seeks to solve. These venues help you unearth raw, unmediated takes that surveys will miss. What questions do people have over and over again? What features do they wish existed? What’s frustrating about existing solutions? The more you listen to your market, the closer you can align the way you serve them and establish yourself as the business that gets its customers.

Analyze Available Data and Tools

After collecting qualitative insights, you will have to justify them with data. Extensions and analytics of available tools and platforms give the measurable objective insights necessary to validate patterns and prioritize opportunities. Start exploring Google Trends to understand how interest in your product, service, or industry has changed over time. You may compare several terms and filter by geography or timeframe to identify seasonal trends and regional preferences.

Use Ubersuggest, SEMrush, or Ahrefs for comprehensive keyword research. You can use these tools to monitor your site’s search queries, competition, and backlink opportunities. You can even spy on which pieces of content, paid ads, and audience segments work best for competitors. This, in turn, empowers your business research process to refine your digital footprint.

Real-World Example

 

Take, for example, a founder attempting to launch a personalised skin-care line catering to Gen Z customers. The entrepreneur originally believed that eco-friendly packaging and influencer marketing would do the heavy lifting in terms of selling points. But when you do some experimental research, the data shows a more lucrative way ahead:

• Market research indicated rising demand for clinically backed, custom skin care products among professionals aged 30–45.
• Our competitive market analysis concluded that more than 90% of brands in the space focused on aesthetics while ignoring the science behind healthy skin.
• Customer comments gathered in focus groups and Reddit threads pointed to pain points such as sensitivity issues, misleading ingredient claims and a dearth of trial-size options.
• Industry analysis and reports from Statista have indicated a marked increase in interest for transparent skincare with dermatologist-tested ingredients and customizable routines.

With this data in hand, the founder maintained a competitive edge. Rather than chase Gen Z, they based their brand on medical-grade personalisation, sustainable packaging, and direct-to-consumer subscription models. The result? A 40% increase in customer acquisition in the first quarter and an average customer lifetime value 1.8x greater than expected. This is a prime example of how proper ethnographic research can inform your strategy, refine your positioning and increase your ROI.

Conclusion

Business research is no afterthought; it’s your first tactical, strategic move. It provides you the insight to be fearless in your business decisions, the data that backs up your statements, and the flexibility to pivot when necessary. Without it, you’re constructing a business on shaky ground.

You are all about insights and action at BEND Advisory Group. Whether developing your business plan or scoping the innovation landscape or another growth opportunity through primary and secondary research, we help you every step of the way. Want to build a business plan buoyed by data, systems, and a plan to win? Book your free session with BEND Advisory Group.