In Chrissie Douglas’ latest Insight, she reflects on the entrepreneurial focus of the latest Budget and the key role market research has to play.
Budgets…I have to admit…I have never really taken much notice of them. It just seems that each time the budget comes around, my husband reminds himself that he must give up smoking – I remember him saying he would give up when they reached five pounds a packet…and that was ten years ago! It was only after talking to a friend who recently lost her job that we got into a discussion about the recent budget. She has been a trainer for over 15 years but because of the range of new start-up incentives offered in the March budget (such as the extension of the rate relief scheme, business rate holidays, corporation tax reductions, entrepreneurs tax relief, R&D tax credits and the introduction of enterprise zones), she is now considering setting up her own consultancy firm. I know it’s only one example, but the government’s strategy which promises to “tear down the barriers to enterprise” may have actually got people thinking. We may be about to witness a new start-up boom.
This took me back 15 years to my undergraduate business degree. One of the things I remember (and there isn’t very much) is the huge failure rate in new business start-ups. I rechecked the stats and the gloomy picture remains. Depending on the source, the rate of business failure in the first year varies from 30% to 50%. Even worse, of those start-ups that do survive, as many as 95% will fail in the first five years.
The reasons for failure make interesting reading. They include a variety of factors such as overexpansion, overspending, poor location, bad management, failure to change with the times, ineffective marketing, underestimating the competition…the list goes on…but a recurring theme is poor business planning and lack of research. Basically, a failure to truly understand the market (i.e. customer needs and preferences, their decision making processes, price sensitivity, and who they are up against). As such, it is clear that market research has a critical role to play in the government’s plan for growth. Market research provides the necessary ‘intelligence’ on which to make more informed business decisions and minimise start-up risk.
But hasn’t this always been the case? Haven’t we always seen peaks and troughs in business start-up activity and hasn’t market research always had a key role to play? The answer, of course, is yes on both counts but often the major barrier to market research is both cost and perceived need. On the first point, and particularly for new start-ups, finance is often tight (especially in the current climate). On the second point, when an idea is borne confidence is often high. You have an idea, you believe in that idea, so why spend money to confirm that it will work?
The arguments for market research remain the same. It makes complete sense to test an idea in the market place and tailor the concept before making a sizeable investment. In this current cycle, however, we believe that market research is better equipped to play its role than ever before. Market research can now be carried out more cost effectively than in the past as a result of advances in technology and the use of online survey techniques. Online market research eliminates the high costs involved with face-to-face, postal and telephone data collection. It also offers the benefits of speed and data reliability and eliminates the barriers often associated with global research. For a business which needs to gain a general view from a large cross-section of the population, in as short a time as possible, there is no doubt that online research offers a viable solution.
Any new business start-up or new product launch is inherently risky as it is a venture into the unknown. B2B International has shown that thorough, well planned research can accurately pinpoint the richest areas of opportunity and therefore prioritise the most promising areas for new start-ups and new product development.
To learn more about how B2B International can help you, contact our New Product Development Research Team.