Why we need to rethink market research in a business plan

Every now and then I can read, or even write, a business plan about an idea, a product or a startup. One part of it always bewilders me since I never trust the numbers: Market and competitive research.

On the one hand, most business plans do cover the topic only very superficially by either stating “it’s a blue ocean solution” so there is no competition at all, or making very broad assumptions about who else is there in the market at this very moment and why the proposal is so much better. On the other hand, the basis for the fancy “of-the-roof” charts are sources such as a survey from a consulting company, a Gartner report or similar sources, which, as we all know, have their own misconceptions and biases.

So what to do instead? The obvious objective for market research in a business plan is to understand what is going on around the (proposed) company and what could be possible reactions of the market. In many digital endeavors where a “winner-takes-it-all” perception of the market exists, there is probably only one thing certain: The proposed company will most likely not succeed. In markets where a more competitive landscape might emerge, the business mechanic is probably more important then any competitors on the market now and in the future.

One key element I would be looking for in any decent market research is what the landscape is now and how it could look in the next year, the next three years and the next five years (since the world tends to spin, or so science let’s me believe). The accuracy is not the most important about it, but the understanding of the executive team of the markets. This would be paired with a few simple metrics that are observed and ideally have some sort of early indication for a change. Furthermore, a set of strategic options should be prepared (what do we do in case of XY, etc…) which gives insight into the teams thinking.

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