How to Research Your Market

Once you're sure of your business idea, dig in deeper. You need information that'll help you develop a unique business proposition that'll give you a competitive advantage. The best sources of information will vary depending on the type of business and circumstances, but options include the following:

• Trade information. In the wedding site example cited earlier, the trade association for wedding planners provided a direct pipeline to the information the event facility was seeking. Other trade information can also be found in print or online trade publications, or by walking the aisles of a trade show.

• Demographic and economic data. Try the U.S. Census Bureau's American FactFinder, State Data Centers or most recent Economic Census to find things like age range, income, number of businesses by type in a geographic area and total sales in your category. For even more information, a reference librarian can point you to other specialized databases.

• Business groups. Your local chamber of commerce may be able to help you find the information you need. Also try government-sponsored Small Business Development Centers, which assist entrepreneurs and small-business owners.

• Local universities. Sometimes professors at business schools are interested in having their graduate students do a market feasibility study for course credit.

• Local competitors. If you're starting a local business, shop the competition and check their Web sites. Or find a similar business in a similar city and ask to talk to the owner. Also look for similar businesses for sale and contact the brokers for information like why they're selling and what their financials are like. You may be interested in buying that business yourself.

• National competitors. Do an online search of businesses in your industry and evaluate what they offer to help fine-tune your idea.

• Potential customers. Run your idea up the flagpole with informal focus groups. Talk with friends of friends -- but not your own friends or family, since they may not tell you the truth -- and old customers or existing customers if you're already in business. This is the acid test to see whether your plan is ready for prime time or needs tweaking.

All this detective work will pay off, either by helping you validate your business plan, sending you back to the drawing board, or convincing you to shelve it altogether. And don't worry if that happens -- inspiration will strike again.