People begin the company formation process for many reasons; the threat of redundancy, wanting to become their own boss and many believe they have spotted a niche in the market and want to exploit it. Whatever your reason for forming a company, it is vital that you conduct some market research. As not only do potential investors expect you to have considered this fully , but also, your business plan will look much stronger after you considered the market context you are about to enter.
When forming their own company, many people look to do so within a sector they have experience. While experience in your chosen sector is advisable, there are various elements that still need to be considered:
– Establish if your sector is growing. How many companies were formed in your sector in 2007? How does this compare to the number of businesses started in 2008?
-If it is a growth market, has it become saturated? If it is not, and the sector is losing a lot of business, you need to establish why this is and if the proposition of your new company is strong enough to rise above your competitors.
Look to local businesses
Though it is important to consider national company formation statistics, unless you are going to roll out your company on a national scale, it is very important that you research what is already available in your sector locally, if you can offer something more and whether there is enough demand.
Be a market leader not follower
Though it is vital to research the current market, consumer trends and context. There is also a model that suggests that innovating trends, not following them, is key to success and business growth. For example many internet entrepreneurs went against traditional business practice and did not fall into any established sector.