Startup Business Plan: Market Research

Stop us if this sounds familiar: You’re sitting around, having coffee, maybe chatting with a friend (potential future co-founder), and then it hits you — lightning strikes and you have this great idea for an app! It’s valuable, utilitarian, and easily (or so you assume) marketed. You start creating startup business plan in your thoughts.

Yeah, maybe take a second here. Yes, what you do know is that this can be an exciting, thrilling, and potentially life-changing opportunity. What you’ll forget until later is that this idea you have to start a business is chock-filled with stress, long hours, second guessing, and anxiety — if you don’t start this endeavor with a proper business plan for your startup.

First of all — before you go any further — you should validate your startup idea. Find your market, ask essential questions, and do extensive market research. This will uncover endless amounts of valuable information, and, in turn, illuminate why your project hasn’t been done before.

If it has been done before, and you have little to nothing to offer when it comes to innovation and/or improvement to that iteration, you might want to rethink what it is you’ve thought of. If it hasn’t been done before, you need to do all of this as a way of articulating a discernible, tangible and marketable value: what value is your startup idea bringing to the world?

Define the business value of your idea

The Concept of Value

Value is a funny thing; it means different things to different people at different times, changing as much with one as the other. And to complicate matters more, its very definition varies across different fields.

But for the entrepreneur, it’s useful to think of value as the connective tissue of markets; businesses and consumers coming together — both seeking value. So, let’s then treat value as the context of a given business.

You can imagine why it would be subject to constant change, no? The business environment, consumer preferences, social trends, environmental issues, economic factors—all these things are in perpetual flux, constantly changing people’s concept of value.

The Value of Problem-Solving

Another useful abstraction for thinking about markets is the concept of problem-solving. In business school, students are taught a paradigm that breaks down the value concept in terms of how a business interacts with the environment (market) in which it operates.

The basic idea is that businesses exist to create, propose, deliver, and capture value in this virtuous cycle that benefits businesses and consumers alike. The way this happens? Problem-solving.

Wherever there is value being created, there is usually a problem being solved. And in business, the more relevant the problem, the more value created by the solution.

Ok, out of the abstract and back to reality! Let’s review some problems and corresponding solutions in business. See if you can spot a pattern.

Value as Solution

Problem: o get from Point A to Point B you need to know where you are, have a map, and manage to optimize your travel to the shortest distance — without having to stop and ask for directions along the way.
Solution: Google Maps

Problem: Some things you need for your home, you can spend a short trip getting. But others might require more thought, comparative shopping, and more time than you’re prepared to dedicate in one day. More often than not, you spend your entire weekend driving from one store to the next.
Solution: Amazon Prime

Problem: You’re hungry, you have nothing readily available to cook at home, and even if you did, you don’t have the energy or patience to put time into cooking. At the same time, you’re not quite sure what you want to eat, and you don’t want to spend too much time not only figuring that out, but hunting down all of the necessary contact information, calling, calling in, and then reading your credit card over the phone.
Solution: Seamless

The pattern? All of these solutions now come in a highly convenient app-form, and now we all recognize how popular apps are. Could that be because they’re solving relevant problems—some we didn’t even know we had until they’d solved for them?

Qualify the Opportunity: Is it an opportunity worth validating?

A startup does not exist in the entrepreneur’s mind alone. A startup exists in the landscape of customers and potential customers.

So, if there will be people buying or using your product, you need to learn all you can about these people, from these people, and for these people.

Your business will live or die based on their receptivity to the product or service. The sooner you learn about your customers, the faster you’ll be able to adapt and serve them better.

Define customer jobs

Jobs describe the things your customers are trying to get done in their work or in their lives. A customer job could be the tasks they are trying to perform and complete, the problems they are trying to solve, or the needs they are trying to satisfy.

Use the following trigger questions to help you think of different potential customer jobs:

startup business plan - EzeTech

Customer jobs often depend on the specific context in which they are performed. For example, you should understand the difference between going to the movies with kids and going with your partner, eating at home for comfort and booking a table in advance at a restaurant for the aesthetic and experiential value.

The more variation you introduce to your line of questioning, the closer you’ll stay to the customer.

Find customer pains

After you understand how you can improve the lives of your customer base, you then need to understand the root of that inconvenience; find what’s really bothering them.

Understanding the main fears of your target audience will give you an insight into why the customer could or would — or has — abandoned your product. In order to determine them, you can ask yourself such questions:

startup business plan - EzeTech

In the end, you will have information about what annoys your customers before, during, and after trying to buy something.

Using this knowledge, you can overcome buyers’ main barriers and whatever else stands in the way of the decision to buy your product \ service.

See customer gains

The benefits could very well be different for everyone. Some want to save money, others time, and even others who won’t see the value in buying into your product or service without the promise of some extra incentive in return.

To understand how to satisfy your potential client or customer, you need to understand what motivations will inspire them to consider purchase without you ever having to force the issue. For this, you need to live “in your customer’s body” behave like them, spend at least one day in their environment, get into their heads.

Are you there already? Excellent! Now ask yourself these questions:

startup business plan - EzeTech

Try to describe gains very concretely so you could differ them from the pains and the jobs. When you understand how exactly customers measure these gains, you can design better gain creators in your value proposition.

Create a customer profile 

Once you’ve done your initial market research, gathered some preliminary market data, and begun to at least tentatively understand the profile of your target market, it’s time to dig deeper — it’s time to start thinking in terms of customer personas and create your ideal customer profile.

So, wondering how to define your target audience for your startup?

You should use all of the information that you’ve gotten from the questionnaires, synthesize those into key insights (gains, pains and customer jobs), and compile it all into one place — use this canvas for your customer profile data. But remember: one customer, one profile.

startup business plan - EzeTech

This persona should be a visualization of your real potential customer, so try to make it as real as it possible. From the beginning, this will give you an understanding as to how you might present your product as appealing to this customer.

Then you could go in-depth and create a wider profile that would include hard factors such as age, sex, education level, and income, as well as soft ones like temperament, sensitivity, or curiosity. Don’t forget to think about places they visit, books they read, films they watch, and any other cultural influence you can add.

All this will help you to create communication strategy in the future and validate your real customer.

Create a value map

After you put together all possible pains and gains of your customer, it’s time to think how you could satisfy them. This is called a “Value map”, where you can include everything you could propose to your potential customer that would relieve them of any doubts about your product.

The Value Map describes the features of a specific value proposition in your business model in a more structured and detailed way. It breaks your value proposition down into products and services, pain relievers, and gain creators. Focus on one value map customer for one specific customer segment, and make a new map for a different Value Proposition.

startup business plan - EzeTech

Value proposition design

The Value Map and the Customer Profile help when it comes to the process of evaluation, helping identify various problems customers face in way that influences the design of your value proposition.

Different customers might have different problems based on different needs — and sometimes it is hard to satisfy them all. But, it is important to work with all of these problems because the more options the product offers, the more customers it will attract.

Use the Value Proposition Canvas as a starting point to get out and investigate your assumptions. Ask yourself if you really understand which jobs are important to customers and what the related pains and gains are. Test to see if your assumptions about how your products and services will relieve pains and create gains are actually valid.

startup business plan - EzeTech

Do Market Research

So when you’ve passed through all the value design preparation, now if it’s about solving problems. How does the aspiring entrepreneur determine if his\her app idea is solving a problem worth solving—that is, one that is relevant to the market they aim to serve?

This is where the market research process comes in.

So, what is market research and why should you do it?  Basically, you’re getting a feel for what’s going on in the market—what people actually value and what kinds of problems are missing solutions.

The point isn’t to confirm your intuition. Instead, you want to be as objective as possible. Collect as much information as you can by using different market research methods in order to confirm that your concept of value corresponds with the market’s.

Warning: Once you start investigating the market for your app idea, you’ll likely run into the unpleasant observation that some other entrepreneur is already doing it. Don’t be discouraged! Competition just means that your idea is truly a relevant opportunity to drive value. Keep thinking it through, and you just might discover something your competitors overlooked.

Look at those who are already doing something in your niche. If you find that your competitor has the same audience you do, check out the way they communicate with it. This will help you to identify what and how — or how not — to write, and that can be an incredible way to discover how you can distinguish yourself.  But that comes later.

For now, it’s most helpful to ask the right questions because it’s the right time to meet your potential customer and get the answer you are thinking about all the time as an entrepreneur: Do they actually need my product?

Validate the problem with the help of surveys

One of the steps to get a startup off the ground is to validate the problem before developing the product (MVP development).

The reason why so many startups launch every day — and why so few of them succeed — is that it’s not hard to build something. It’s hard to understand whether anybody needs it.

So, you have to validate the problem.

When you’ve already launched a prototype, you should get an opinion from your target audience about the product or service you provide. Of course, the best feedback you’ll receive is whatever you can get face-to-face, but if your product is just an idea for now, then it’s better to get as much feedback as you can.

How do you get it? Go deep with interviews and surveys.

Pro tip: never ask your mom about your idea. The best feedback is the most useful feedback, and you’ll get that from people you don’t know. To get that, you need to do it anonymously without mentioning your idea, and to ask only suggestive questions to get longer answers, not simply yes or no answers.

Such surveys can be conducted via Google Forms, Survey monkey, Survey.ioTypeform, etc. Using these tools, and the answers from your questions, you’ll likely get the most fair answers you could hope for and, in turn, a better idea as to whether and how relevant your app is to your potential customer.

They can also help to broaden the target audience because — and this might surprise you to know — every person has their own needs. Beyond that, it can push you further into thinking how best to improve the product and what features you might add.

But understand this is important: the answers you receive will be the most precious thing from the start. Never underestimate the importance of market research for startups and go deeper to identify your target audience needs.

What information can you get from surveys?

  • Whether the problem is big enough for a potential customer to think about what it’s resolving (ideally with the help of the product itself, of course);
  • Desired functionality that will help to resolve the problem;
  • How much the potential customer is ready to pay for resolving it.

Having analyzed this information you can:

  1. Avoid spending all the time and money of the world for developing the product nobody wants (except you).
    ►It can take a lot of time and money to build a business, but spending time on conducting surveys will protect you from spending even more time and money developing a product nobody wants.
  2. Get insights for developing more valuable product.
    ►Simply by communicating with potential customers you can understand where exactly the pain points lie and develop a much more valuable product
  3. Get new ideas for Startups.
    ►Because why not? The more ideas – the more opportunities!

Asking the right questions is the opportunity to validate the problem and understanding if, where, when, and who needs your product. And it takes you one step closer to the start of developing an МVP!


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