Why you need to do your market research

Is it time for your business to grow? 

To achieve sustainable growth, a startup must not only have a solid business model but also generate a healthy profit. For that, it is crucial you do your market research. 

Here are several reasons why startups should prioritize market research before embarking on international expansion:

Understanding Competitors

While a startup may have a unique and effective business model in its home country, it may face numerous competitors overseas. These competitors could be more established and possess a stronger foothold in their respective markets. Conducting market research allows a startup to assess the number and strength of potential competitors. This information enables informed decisions regarding how, when, and where to expand.

For instance, if a particular area in a target country is saturated with similar businesses, the startup might consider launching in a different region where competition is less fierce. By understanding the competitive landscape, startups can strategically position themselves for success.

Identifying the Customer Base

Without market research, startups cannot accurately gauge their chances of success in relation to potential overseas customers. For a startup to thrive in the long term, there must be a viable market for its products or services. If such a market does not exist, the startup may either need to create one or consider expanding to a country with a more established demand.

A loyal customer base is essential for startups during the expansion phase, as it can help stabilize operations amidst the high costs associated with growth. Market research provides valuable insights into customer preferences and potential demand, helping startups make informed decisions before investing resources in expansion.

Gaining Investor and Shareholder Confidence

Investors and shareholders often seek reassurance when it comes to overseas expansion, given the inherent risks involved. Similar to financial trading, there must be a compelling rationale for investing in expansion efforts, alongside a clear pathway to profitability.

Market research offers tangible evidence that supports the viability and potential profitability of expansion plans. By presenting data on market demand, competition, and customer preferences, startups can effectively communicate their strategy to stakeholders, fostering confidence in their growth plans.

Minimizing Risk

Expanding into a new market without conducting proper market research significantly heightens the risks associated with the endeavor. Lack of preparation can lead to missteps, financial losses, and even failure in the new market. Conversely, thorough market research can mitigate these risks by providing startups with the insights needed to make strategic decisions.

For startups, investing time and resources in market research is a critical step toward successful and sustainable growth in new markets, but sometimes they may not have the resources for that. That’s where The Venture Builder can help you.

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