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Research Guide:
Researching Your Location
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Many new businesses conduct market research to determine their target demographic and to profile their local market population. However when it comes to actually finding a specific address to locate their business they do not take the time to examine whether or not a particular location will reach the market they have identified.
"Location, Location, Location" It is probably the most familiar piece of advice given to businesses targeting the consumer market. Yet it is the one most often neglected by new entrepreneurs. Concerns about market exposure or ease of access for customers are overshadowed by the desire for cheap rent and minimal renovation demands. Certainly occupancy costs must be maintained at a level within a business' budget limitations but this should not be done at the cost of lost sales. It never ceases to amaze me when I go to visit my parents north of a Toronto, how a certain business location over and over again reopens as a restaurant. Over the last ten years there have been at least 6 restaurants that have opened and closed operations there and another one has just opened. I can understand the attraction of this address for a new entrepreneur with a limited amount of capital. It already has a fully functioning kitchen and a newly renovated dining area. All that is required is to individualize the space with paint and accessories. Moreover the local demographics within a 10-km radius are perfect for nearly any type of restaurant. This particular location however clearly has some problems that are preventing success. When you are just starting a business, it is easy to dismiss another business' failure as being something lacking in the previous entrepreneur's idea.
After 6 different restaurants have opened and closed at one location, it is clearly not the type of food served but rather the location. Perhaps it is a lack of accessible parking or perhaps it is the strong competition located on the other side of town. Further research is required to determine the exact cause but the fact is that there is a fundamental problem with this location for restaurants. Make sure you do not stop your market research once you have decided on a particular market. Research specific locations as well. Find out what types of businesses were located there before you. How long did they survive? What sort of market did they serve? Why did they move? Did they go bankrupt? Move to another location? Did the owner retire? Just because a business is no longer at a location does not necessarily indicate that it left under bad circumstances.
Once you have a list of former businesses look at previous issues of the Yellow Pages. Not every business advertises in the Yellow Pages but for those that do you can get an idea of their marketing strategy especially if they have a larger ad. Larger ads usually contain a list of services or product lines carried by a retailer. Also look at previous issues of the Yellow Pages (most libraries archive back issues) to observe advertising trends and identify businesses that may no longer exist. If you find a business that is not listed one year, follow up by telephone or by physically visiting their location to see if they have really gone under. It is possible that they are still in business but have decided to no longer list in the Yellow Pages. If they are actually out of business consider the particulars of the location and what could have caused troubles. Finally, do not forget to talk to existing businesses around your location. Do they remember the type of businesses that were located at your potential location? Do they have any opinions on why previous businesses went under? How is business for their particular store? Find out what sort of clients shop in the area. Can you successfully target the market that is already spending money at businesses close to the address you plan to rent? If not, will it be worth the money and effort to try and attract an entirely new market to the area? Will it even be possible to attract a new market to the area? These are all vital questions to determining whether or not a location is suitable for your particular type of business.
What if your business has no location? Researching the non-store consumer market can be challenging. While all of the above sources will assist in determining the market for your product or service, you will still need to research the particulars of your non-store business environment. The basic question you need to answer is whether or not your product/service is viable in a non-store environment. In other words will people buy from you if you do not have a store/office? Statistics Canada collects data which specifically looks at the non-store retail sector. It provides insight into sales by product type as well as industry (e.g. Electronic shopping and mail-order houses, Direct selling businesses). You can access more detailed results from this survey via CANSIM table:080-0012 For more information on CANSIM click here. Also look at our Source List listings for non-store retailers.
E-commerce & The Internet The Internet consumer market is a unique challenge to research onto itself. Conflicting data on e-commerce is released almost daily. In order to successfully research the potential of your particular product/service, you must sift through the hype. One excellent on-line source is ClickZ Network (http://www.clickz.com) This web site acts as a clearinghouse of Internet news releases. You can conduct a keyword search and quickly collect together all the major statistics that have been produced. While the content at this site is excellent it is often lost in a sea of online ads! Make sure you read carefully to find the actual information presented. Statistics Canada also tracks e-commerce sales directly. There are a number of free tables available at their web site. Also see the latest release for the Survey of Electronic Commerce and Technology. Also see CANSIM: tables 358-0007 to 358-0011 and 358-0014 to 358-0016. For many more sources on e-commerce and the Internet use, see the Internet Sector listings within our Source Lists. The following Internet subsectors are covered and updated regularly:
Next: Business Market
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URL:
http://www.gdsourcing.com/ResearchGuides/Market-Location.html
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