When you're writing your business plan, providing proof that there is demand for your product and gathering information on the market is one of the most vital parts. But what's the best way to go about it, and communicate your data within the confines of a business plan?
Robin Young is the founder of Fitness Savvy, a price comparison website for equipment, supplements, and more. Here are Robin's tips for getting your market research right in a business plan.
Establishing a niche for the product
Fitness Savvy is the UK’s first dedicated fitness price comparison website. Our aim is to become the first place people visit for their fitness needs. We produce high-quality, scientifically researched articles, workout routines and advice.
Where there are websites like vouchercodes.co.uk who specialise in discount vouchers, users will find them on our site. Although price comparison sites such as PriceSpy and Idealo sell many fitness products, you will find a wider range, with more accurate pricing on our website. These sites also have no dedicated fitness information. We also include embedded YouTube videos on most of our products so users can find out as much info as possible about the product they are looking to buy before committing.
I knew from the constant Go Compare and Compare the Market adverts on the television that there was money to be made in price comparison, so I decided to see if there was anything similar for sports and fitness. I did very basic research and immediately discovered that there not much going on, and so I moved on to investigating the value of this market.
Understanding the market
I believe understanding the value of the market is important before dedicating time to conducting surveys and organising focus groups. It’s all very well having a great response to a questionnaire, where everyone says they would buy your product, but if it is in an industry worth nothing, or is over-saturated, it might need further investigation before jumping in.
Therefore, much of the initial market research I conducted was around the supplement industry – to see what the trends were doing, and how much the market was worth. Once satisfied that this was large enough to get involved in, I began examining the state of the affiliate marketing industry, and how much this industry was worth, too. I discovered that there was a strong upward trend in both the supplements industry, and affiliate marketing.
Establish the target market
The next thing was to try and establish who our target market is. Many of the articles I found relating to the supplement industry discussed the demographics of the market, which was fantastic. Anyone looking to start a business will find a lot about their target market while looking at industry statistics. For example, we found that supplement sales were increasing, and that it was males aged 18-35 driving the trend.
Now that I knew there was a market, and who the customers were, I looked in greater detail at the competition. I did briefly look into competition when I first had the idea for Fitness Savvy. It was this reason that I went further with my research. If you know that there is little or no competition for your product or service, and that the product you are creating has more than one unique selling point that the others don’t, you can be confident that anyone using their product or service would convert to yours once they know it exists.
Armed with this knowledge, and the fact that there were no dedicated fitness price comparison sites around, I was prepared to go out and question our target market. We had prepared a survey using online survey companies. It cost around £100-150 to get 50 responses. It was slightly more expensive because we asked a “qualifying” question. This qualifying question allowed us to target the survey at those who would be interested in our product.
For us, the qualifying question was “Do you regularly exercise and work out”. So all the people answering our survey answered “Yes” to this. Although we understood our market was primarily male, we did not exclude females from the survey. Interestingly, when asked, the female demographic were less likely to use a price comparison site to purchase supplements, whereas over 90% of males said they would. This re-enforced the profile of our target market.
Demonstrating to users
We had already begun building our website, so were fortunate enough to have something to demonstrate to potential users. We took a tablet and asked gym-goers what they thought of the site, using questions relating to ease of use, look, feel, professionalism. This helped us understand what was and wasn’t working. So anyone out there with something they can demo would be wise to take it to the streets and ask their target market some questions.
Communicating the research
The research allowed a better understanding our own product and helped us prepare a more solid business plan. This is paramount when seeking investment, as any holes, shortfalls or uncertainties could affect the decision to fund. This means that you must understand your business plan inside and out, without having to refer to pieces of paper. Once you reach that stage, you are ready to present it.
Communicating the research in the business plan is highly important. Your research might have highlighted countless reasons why your product would succeed. But if it is not laid out in a logical manner, and contains the relevant information, your message might not be received. For my plan, I used the “references” section in Microsoft Word and inserted “footnotes”. I referenced websites and sources of the information I used. That way, I could talk about the market, and all the info I had used was included at the end of the report for the user to look further into. This helped keep the plan more concise, and allowed for better organisation.
Backing it all up
Always include the entire results from the market research questionnaires, attached to the end of your plan. However, don’t write a paragraph about every single answer you received and what the results mean. Instead, pick out the highlights and explain about them and what they mean. For example, over 90% of people researched said they would use a price comparison site to buy sports supplements. Another question asked how often people go to the gym. This was an important question for us to understand our market, but is not really important to cover off in the business plan. If the funders are interested, they will look at the entire report attached to your plan, and if they have questions they will certainly ask!
My biggest tip for anyone looking to write a business plan would be to firstly look at the competition. Spending weeks preparing an awesome business plan only to discover someone is already supplying your product or service very successfully could be a huge dent to your confidence. However, even if there is competition – which is normally the case - if you are confident that you have a USP that improves on the products and services currently on the market, you have a green light to move forward. Investigate the industry, identify your target market, compare the competition and then ask your potential customers what they think.
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