primary research for business plan

How to research the market for your business idea like a pro

You know your business idea is a winner .

You are motivated to make it succeed.

And you are excited to get started.

But it’s dangerous to jump right in without first making reasonably sure that you are on the right track and this business is actually worth your while .

Imagine wasting months or even years of your life on a venture that was destined to fail from the start, and you could have avoided it by doing some basic market research.

And if you are looking for outside financing , investors and lenders expect you to research your market and test your product or service. That is especially true if you are a startup.

So, collect, digest and analyse pertinent data. Arm yourself for the inevitable scrutiny and grilling from your potential backers. It will come.

WHAT Is Market Research?

Why should you do market research.

Use market research as an opportunity to question your business plan and uncover issues that could cause you serious headaches in the future, including (but definitely not limited to):

• Are you sure that enough people are actually willing to pay for what you are selling?
• Can you stand out in the sea of established and fast moving competitors?
• Is the industry contracting or prohibitively riddled with regulatory hoops to jump through?

You would be surprised how many entrepreneurs reconsider their plan of action altogether after researching and analyzing the industry and market.

It is a good investment of your time that you will not regret. Trust me.

HOW Do You Conduct Market Research?

When you hear market research, you probably think:

I’ll just Google the name of my target market alongside words such as ‘market / industry’ and ‘trends / forecasts / growth’.

And you are right, that is a good way to start, but:

There are two kinds of market research – primary and secondary – and you should do both to properly address any market research assignment, such as the market analysis section of a business plan:

1. Primary Market Research

2. secondary market research.

There are many different ways you could go about collecting data for your industry and market research, depending on the type of your business, needs, resources and circumstances. So, we have selected a few popular approaches for you to consider:

PRIMARY Market Research Methods

Your primary market research could include some of the following methods:

• Experimentation and trials
• Field research
• Customer interviews, surveys and focus groups

Observation

• Internal data
• Consulting experts

Experimentation and Trials

For example, testing a product or service on the high street or online by selling a minimum viable product on a limited time basis.

Field Research

Field research examples:

• Doing traffic counts at a retail location you are considering
• Going online, phoning, or driving around to identify, visit and ‘investigate’ competitors and suppliers

Customer Insights

Gain insight into your customers’ minds through:

• Customer interviews
• Focus groups

Talk to people or businesses (e.g. corporate buyers) that fit the profile of your target customers about their needs, wants and preferences as related to your business and offering (e.g., what they like and dislike or how they make buying decisions).

These can be conducted online , phone or in-person , and may be as informal as walking around the target neighborhood where you would like to set up shop and talking to potential consumers, or as formal as hiring a market research firm to conduct professional-level research.

For example, observing customers and sales in a store, taste tests, mystery shopping. Observing consumers in action is as crucial as talking to them.

Internal Data

Analyzing internal business and sales data of an existing business (e.g., databases and enterprise management systems)

Consulting Experts

Other business people, industry experts, suppliers and even competitors are a great source of information:

• Talk to other business owners.

Especially those in non-competing markets with similar services or products (e.g. different city) . Attend events, conferences and talk to other business owners.

• Talk to experts.

Consultants, professors, journalists, corporate managers and other experts are constantly writing about and commenting on specific industries and markets.

• Talk to suppliers and/or competitors.

While you will not uncover any trade secrets, the conversation could provide valuable insights into the industry as a whole.

Talking to potential customers and observing them in action is crucial. So, launch your web browser and Skype/Zoom apps, pick up the phone, and get out and talk to people.

SECONDARY Market Research Methods

Secondary market research is data sourced from external resources, including:

• Trade data and journals
• Media that target customers prefer to read, listen to or view
• Government statistics
• National and international economic data
• Industry profiles and research indicating market trends
• Demographic profiles
• Market research reports by professional firms
• Books and other publications
• University and government research studies
• Examples from non-competing markets to study other businesses with similar products/services/ventures in other cities, countries or even industries
• Intelligence on competitor activity

You can find secondary information in many places, such as:

• Online (e.g., company records, company websites, websites capturing financial information trends, social media sites)
• Chambers of commerce
• Trade and industry organizations
• Vendors and suppliers who sell to your industry
• Government agencies
• International bodies
• Competitors’ online and offline resources (e.g., websites, stores, ads, newsletters)

WHEN Should You Use Primary and Secondary Research?

Best use of secondary research.

Using sources of information that already exist can save a lot of time , energy and money . On the other hand, the data might not be as tailored to a specific audience as one would like or need.

While secondary research is less targeted than primary research, it can yield valuable information especially when answering the following two types of questions:

• Questions that are general , quantifiable , and not practical to address through primary research, such as assessing macro-economic conditions (e.g., industry trends and demographic statistics
• Questions that could make customers uncomfortable if asked directly (e.g., age and income levels)

If you are looking for outside financing , investors and lenders expect you to carry out some level of primary research, not only consult secondary sources. That is particularly relevant if you are a startup.

Best Use of Primary Research

Secondary research may be a good starting point, but asking consumers yourself can give you a much more nuanced understanding of your target audience.

The benefit of primary research is that you can target selected groups (e.g., existing customers or desired geographic market) and tailor your research instrument to answer specific questions.

But, the drawback of direct research is that it can become rather time consuming and costly . Also, the results are not available immediately.

That can be especially true when the original information for primary research is not gathered through your own efforts but performed on your behalf by an outsourced professional market research firm.

As a result, primary research is best used to answer a particular question or set of questions about your business or customers.

For instance, primary research could investigate reactions to your branding/product/service, improvements you could make to buying experience, and where customers might go instead of your business:

• Which products and services do buyers need or want ? (e.g., preferences, expectations, likes and dislikes about your product or service)
• What factors influence the buying decisions of your customers? (e.g., price, service, convenience, branding)
• What prices should you set for your products and services?
• Who are your competitors , how do they operate and what are their strengths and weaknesses?

REFERENCING Your Research Sources

Make sure that all stats, facts and figures from external sources included into your business plan are properly referenced. Not doing so undermines the credibility of your plan.

How Should You Reference Your Market Research Sources?

Tell the reader of your business plan how you did your market research. Prove what the facts are and where you got your data. Be as specific as possible and provide statistics, numbers, and sources:

• Primary market research: Have you conducted any primary research? What types of primary research have you carried out?  What were your resources and your results?
• Secondary market research: What secondary research have you carried out? What were your resources and your results? Have you referenced all sources used in your business plan?

When doing secondary research, always make sure that your sources are reputable. This gives the reader more confidence in the information provided and in the case you are making for your business idea.

The sources also should be noted in both the main text of a document as well as the Appendix.

• Reference in main text:

U.S. Census Bureau (2020)

• Reference list in document appendix:

U.S. Census Bureau; December 2020; Demographic and Housing Estimates; Accessed: 31 December 2021; Link: https://census.gov/data/demographic-housing

So, the general referencing formula is:  [author, date, title, publisher]

• Author can be the same entity as publisher
• Optional for online sources: add date of access and/or link
• Publication date could be just a year, month-year, or even day-month-year if the information is particularly time sensitive
• Title could include a sub-title

Most importantly, always make sure that you comply with the reference requirements of the recipient of your document.

For example, if you are writing a business plan for a grant or visa application, the organization you are applying to could have issued their own specific instructions on how to reference research sources. 

Top 5 MISTAKES in Market Research

1. using exploitative market research services.

Due to the perceived complexity of market research, there are some agencies that charge unreasonably high fees for rudimentary research that businesses can easily conduct on their own.

If you plan to hire a professional market research firm, shop around until you find a reputable company offering fair prices.

Otherwise, in addition to keeping the costs down, an added benefit of doing your own research is that you will get to know the market for your business even better.

2. Not Utilizing Free Public Resources

Some industry and market research resources are available for free and some provided for a fee. But it does not always mean that paid information is better.

For example, in the United States, some of the most extensive and valuable sources of information for the market analysis section of a business plan can be found in the databases, publications and other free resources of the U.S. Department of Commerce, the U.S. Small Business Administration (SBA), the U.S. Census Bureau, and other governmental agencies.

As for the paid resources, libraries often subscribe to research journals and magazines that may help improve your research. Some libraries even provide free access to reports from professional market research firms that can easily cost more than US$1,000 apiece.

3. Family Members Only

Selection of market research subjects is crucial for producing valid results and enable the business to understand the preferences of its actual customers.

Using friends and family exclusively as respondents for market research is a bad idea, because this group of respondents may be partial to the researcher, and they may not even be the target market for that particular business/product/service/research question.

4. Information Overload

If your industry research is for a business plan or a similar purpose, do not overload the reader in the main body of the document. Move everything that is not essential to telling the story into the Appendix. For example, place the detailed results of any market surveys, trials or focus groups that were summarized in the main body of the plan into the Appendix.

5. Overthinking It

Remember, business planning is not about your ability to do professional-level market research–unless you are a corporation.

A business plan intended for a potential investor, lender, or business partner simply needs to show your understanding of where your business fits into the grand scheme of things within your market and industry–and demonstrate that you have incorporated that knowledge into making sound strategic decisions .

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How to Do Market Research for a Business Plan Successfully

The entrepreneurial-minded folks may long have wondered how to do market research for a business plan. 

After all, a business plan lays out the foundation, purpose and expectations of a new business venture. Given that the risks of starting a new business are manifold , entrepreneurs must conduct market research.

20% of American businesses fail after only their first year of operation, a dismal reality that climbs to 30% after two years.

Newfound entrepreneurs and serial entrepreneurs alike should therefore carefully commit to and execute a business plan.

While market research applies to a wide breadth of applications that cover various business cycles and processes, including opening and operating a new business, it too can be used for producing a 

This article expounds upon how to do market research for a business plan — and succeed in your venture.

Defining A Business Plan and Its Needs

Before you set out to formulate a business plan, it is vital to fully understand all that it entails. Usually created for startups, it is necessary for all businesses to implement. 

A business plan is a written document that summarizes the main aspects of starting up and managing a business, making it the foundation for your business .

A business plan specifically details a business’s objectives, along with its financial, marketing and operational needs and a roadmap thereof. 

It is created to guide a business through each stage in its establishment and management.  As such, it allows business owners to lay out their needs and goals and track them as the business grows.

A business plan must be updated at regular intervals , as priorities and goals are subject to change. Additionally, when an established business moves in a different direction, it needs a new or completely updated business plan.  

The Importance of a Business Plan

A business plan is an important document and not merely for the purpose of monitoring your business as it develops. This is because this document is also needed to obtain investment , especially in the early stages of the business, in which it does not have an evidential track record.

Thus, a business plan shows investors whether your business is on the right course and is worth investing their funds into. Lenders will require proof of a business plan when they deliberate the approval of a loan. 

Here are several other reasons as to why creating and updating a business plan is important:

• Making important decisions. It allows you to answer difficult questions at the onset, before they emerge. Understanding these decisions helps you understand how they fit into your overall strategy.
• Addressing key issues to avoid future problems . These include pricing, competition evaluation, market demand, capital and team members.
• Proving the viability of your business . Planning your vision into a full-fledged business bridges the gap between an idea and reality. Market research is essential for this point, as it helps you find key insights on various aspects of your industry, including your competitors and customers. 
• Communicating objectives with team members and all those involved . This is important for larger teams, particularly for assistance when you are too busy to relay information or guidance to your team members. This may also help investors or partners who cannot reach you, as it lays out objectives and criteria.
• Standardizing and carrying out key objectives . Placing your objectives, criteria and other needs gives them more weight and attention. If they aren’t in your business plan, thereby, in writing, they can easily fall by the wayside. A business plan helps avoid this, standardizing key objectives and benchmarks.
• Guiding consultants, freelancers and other workers . When employing freelancers and contractors, you can turn to specific sections of a business plan to guide these workers, to ensure they understand your vision, goal and other key business aspects.
• Obtaining financial support. Whether it is via borrowing from a bank, turning to venture capitalists or putting your business up for an acquisition, a business plan makes your business and its viability clear for these key financial players. 
• Acclimating to market changes . Updating your business plan can help you during periods of critical change in your market. These changes include: changes in customer needs, new regulations, trends or updates in your industry.

Defining Market Research

Market Research is a wide-encompassing practice that involves gathering information to bolster knowledge about a business’s industry, niche and target market . 

It involves the systematic process of amassing, analyzing and interpreting data and information around the state of a business’s industry and its key actors . The key actors entail a business’s target market, competitors and the movers and shakers within its industry.

As such, it involves gathering research around the niche, trends and industry as a whole. 

This involves gathering secondary research , research that has already been conducted and made available, along with primary research , the kind that requires you to conduct yourself. These main types of research gathering involve various means, techniques and tools that researchers can use.

Market research largely deals with evaluating the viability of a new product or service, although this aspect is primarily referred to as customer development . By conducting market research, you can therefore gather information on virtually all areas of your business. 

Why a Business Plan Needs Market Research

A potent document, one that properly lays out the 7 components of a business plan , from the executive summary, to the market analysis, to the strategy, financial plan and all other in-betweens, most use market research to develop it. 

Market research provides the key data, information and nuances your business plan needs. Although a new business or business idea is born on intuition, a business plan must be backed up with data to prove its viability and positioning in its industry. 

As such, market research must be performed in the early stages of the business plan, as it is the phase in which you learn all about your niche, its trends and the demands of your target market (including the makeup of your target market via market segmentation ).

Only after analyzing all of your market research results, will you be able to populate the business plan within key areas such as market analysis, financial projections, strategy and implementation, marketing endeavors, pricing and location . 

A business plan must be comprehensive, another way in which market research is of utmost importance, in that there are various methods and tools you can use to conduct it. By consolidating all of the different market research techniques , you are establishing an exhaustive business plan, the kind that leaves no key consideration out.

The following presents the key data and information of a business plan that market research can extract:

• Demand : Does your product/service have enough market potential to justify a new business?
• Pricing : How will you determine the pricing of your offerings? 
• Target Market : Who makes up your target market? Do they have enough spending power to buy your product or service?
• Location : Does your business require opening a physical store or can it effectively reach its target market via ecommerce? Perhaps it needs both?
• Historic data on your product/ service : How have the products and services in your niche performed over time? How do they perform currently? 
• Marketing and Market Entry : How will you form an explanation on how you’ll enter the market? How will you promote your products/services to solidify your entry?
• Labor Requirements : Do you have enough manpower to form a business? How many employees and contractors will your business require?
• Financial Plan : Do you have the financial means to cover all operations?

How to Conduct Market Research for a Business Plan

Since a business plan ought to include concrete information to pave the way for business success, it requires thorough market research. Given that market research encompasses so many modes and forms, it can be overwhelming and even intimidating to begin to conduct it for your business plan.

The following provides a step-by-step guide on how to do market research for a business plan, so you can craft your plan in an informed manner, equipped with critical market research.

• First, search the secondary sources available; while some are free, there will be many that aren’t.
• Then, narrow it down to a specific niche, with suspected market segments.
• Focus your research via secondary sources on your market. Look at trade publications, new sites dedicated to your market, industry reports, local reports, statistics websites, blogs on the startups in your niche, including their stories of success and failure and other secondary resources.
• Conduct further secondary research on your priorities.
• Then, switch to primary research methods to zero in on your most critical research subjects.
• You can achieve this by conducting secondary research on your target market.
• Use an online survey, a focus group or a survey panel .
• Segment your target market further and start building personas from the shared characteristics they exhibit.
• Be sure to find similar offerings available to identify your competitors.
• Survey your target market on their needs and feelings towards similar products/services, along with their aversions and desires for updates.
• This will help you understand how to set up your prices as well.
• Research the costs of marketing and publicizing the launch of your business.
• Compare all costs and establish a preliminary business budget.
• Jot down their strengths and weaknesses.
• Compare your offering to theirs, does it fill any gaps or voids? Is it better price-wise?
• Break this down from high to low levels of research. Ex: From the general industry to the exact niche, from a large target market, to specific segments, to specific personas.
• Adjust your budget, goals and plans.
• The executive summary, company description, products and services, market analysis, strategy and implementation, organization and management, financial plan and projections.
• Assure that everything makes sense. If there are gaps in the information you have outlined, consider conducting more research.
• Highlight areas of opportunity, along with areas of risk. 
• Edit your business plan as needed.

Empowering Your Market Research-Powered Business Plan

Market research is a wide-reaching practice that blends consumer behavior and economic trends to help you validate and improve a business idea. It can also help you change the course or style of an already established business.

Thus, it is not solely for startups. Market research can be difficult to conduct and manage , as there are so many business aspects you’ll need to consider to lower your risk of failure. Concurrently, there is so many kinds of market research you can stand to conduct.

Even with the steps listed above, navigating through the jungle of market research can be a laborious and difficult task. While you can’t control secondary resources, you can wield control of your primary research endeavors via an online survey platform . 

This kind of market research tool allows you to take the reigns in every aspect: from asking the exact questions you seek answers to , to targeting a specific market segment , to deploying your surveys across the most-frequented websites and apps. 

A potent survey platform will complete all of these crucial tasks , making primary research an easy task. The trick is to find an online survey platform that can handle all of these tasks, along with making it easy to analyze the data.

Do you want to distribute your survey? Pollfish offers you access to millions of targeted consumers to get survey responses from $0.95 per complete. Launch your survey today.

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How to Conduct Market Research for a Business Plan

Rev › Blog › Marketing › How to Conduct Market Research for a Business Plan

Any successful business starts with a thorough, written business plan. For most small business owners, the prospect of gathering and compiling all the data required for a business plan can often seem intimidating. Fortunately, several helpful tools can make conducting market research faster and easier, especially when conducting target customer interviews.

What Does a Business Plan Include?

When building a business plan, you may include different sections or topics depending on how you intend to use the final product. For instance, business plans for internal use might not need to be quite as detailed or structured as plans that will be presented externally in order to secure financing from investors. Regardless of your purpose, most business plans include the following core sections:

• Industry Background – Include analysis of special business considerations that apply to your particular industries, such as trends, growth rates, or recent litigation.
• Value Proposition – Your value proposition (or Unique Selling Proposition) outlines how your business plans to bring value to its target customers in a way that isn’t currently being fulfilled in the market.
• Product Analysis – Describe in detail the product or service you offer, including features that are better than or differentiate you from current market offerings.
• Market Analysis – Examine your company’s target market, including customer demographics, estimated market capture, personas, and customer needs.
• Competitive Analysis – Here, you’ll compare the intended product or service to other offerings in the market and outline your company’s competitive advantages.
• Financial Analysis – Typically, your financial analysis will include estimated sales for the first 1-3 years of operation, as well as more detailed financial projections depending on who will be reading the plan.

Conducting a Market Analysis

Specific industries have different potential customers. It’s easier to reach your potential customers when you have a clear view of who they are. A market analysis helps clarify your ideal customer personas by researching both qualitative and quantitative aspects of your target market.

To better understand your potential customers, start by researching the demographics and segmentation of individuals who typically buy products and services in your industry. Your market analysis should also include:

• Research on the total size of the market
• How much additional market share is available
• Any currently unmet needs that could be sources of competitive advantage
• Features and qualities potential customers find valuable  

Using Market Research to Support Your Business Plan

Market research helps assess a business idea’s strengths and weaknesses. his research will serve as the basis for strategic marketing decisions, price positioning, and financial projections listed in the Financial Analysis section of your business plan. You can also use it to help your management team think through important decisions, ultimately leading to choices that will resonate with your target audience and get customers to buy your product or service.

Secondary Research

Conducting market research begins with fact-finding through the internet and other publicly available resources. This secondary research, or research originally conducted and compiled by others, gathers statistics on market size, average market pricing, competitor promotional effectiveness, manufacturing costs, and more.

Secondary research is necessary because it is often expensive and time-consuming for individual business owners to conduct this research firsthand. There are many reliable professional research firms that gather comprehensive industry statistics and make them available at a much more granular level than individuals could gather on their own. Some governmental organizations, such as the U.S. Bureau of Labor Statistics will even provide this information at no charge. Fortunately for business owners, a free resource is still perfectly valid as long as it’s reputable.

Primary Research

Beyond the initial secondary research, you should also conduct thorough primary research to vet your business idea. Primary research is conducted by talking to members of the target audience firsthand through surveys, interviews, and focus groups . These tools can provide valuable insight into how prospects judge your product or service and how they compare it to alternative options.

Primary research efforts will typically generate qualitative data in the form of audio and video recordings. These interviews are not always brief, and therefore can be difficult to process efficiently unless first converted to text. You can quickly and easily incorporate the content of these interviews into your plan once they’ve been transcribed.

With a speech-to-text service like Rev, you can get 99% accurate transcripts of your market research interviews in a matter of hours. Dramatically streamlining your business planning process with Rev gives you faster access to valuable customer feedback and potential insights, letting you skip the busy-work and get down to business.

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How to Do Market Research

Noah Parsons

18 min. read

Updated May 10, 2024

One of the biggest and most expensive mistakes I’ve made in my business career could have been avoided by doing a little homework.

In the late 2000s, my team and I came up with what we thought was a great idea for a product . Tons of businesses would need it, and it was almost guaranteed to be a huge hit!

But, we neglected to do our market research. 

We ended up with a product searching for a market instead of figuring out who our ideal customer was and building a product specifically for them.

You can avoid making this same mistake. 

Let’s learn from my experience and go over the basics of how to conduct market research. 

• What is market research?

Market research is the process of gathering information about your potential customers. 

It helps you define your target market, craft customer personas , and understand the viability of your business, by answering questions like: 

• Who are your customers?
• What are their buying and shopping habits?
• How many of them are there? 

By exploring your ideal customers’ problems, desires, and current solutions, you can build your product, service, and overall business strategy to better serve them.

• Why is market research important?

When starting a business , conducting market research to get to know your customers is one of the most important things you can do. 

If you don’t understand your customer, you don’t know:

• How you can solve their problems . 
• What kind of marketing messages and advertising work. 
• If your product or service is actually something your customers will spend money on.

Beyond that, market research can help you:

• Reduce risk: Inform critical decisions with real-world data.
• Understand your competitors: Know how competitors and alternatives to your business represent themselves in pricing, quality, and placement.
• Identify market trends: Stay ahead by spotting emerging trends and shifts in the market.
• Enhance customer experience: Improve customer satisfaction by addressing their pain points.

Gathering data on your customers should become a regular practice for your business. 

The more in tune you are with your customers, the better you can serve them and the more likely you are to grow your business. You should never just let assumptions about your customers drive business decisions.

Developing primary and secondary data through market research is how you get an accurate reflection of your customers’ needs.

Further Reading: 6 things to consider before entering a market

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Things to consider before conducting market research

Market research can be incredibly time-consuming (and even a waste of time) when done without the right preparation.

Here are a few questions to answer to help ensure you make the most of your efforts.

What are your objectives?

A research objective is a stated purpose that explains why you’re doing market research. It should include a specific result you intend to achieve, using available resources within a certain time frame. 

Without an objective, you’ll pour over a sea of data without knowing what you’re looking for. And if you speak to customers without a goal, you’ll struggle to ask useful questions and dig deeper.

Don’t overthink it.

Your objective should be easy to understand and connected to your business needs. 

For example, if you’re just starting, your objective may be to verify before investing in production if your chosen customer base is interested and willing to purchase your product or service.

What research methods will you use?

You don’t need to have every question prepped or a list of people to interview at the start—but you should know what research methods you intend to use.

The research options you choose will impact the data you collect, and the time it will take to complete it. By doing this ahead of time, you’ll be better prepared to create a timeline of when to take specific actions and what milestones to hit to stay on track.

What tools and resources do you need?

You likely won’t know every resource you’ll need until you start doing research. However, that doesn’t mean you can’t be proactive. 

If you know the methods you’ll be using, research what tools you’ll need to:

• Conduct interviews
• Create surveys
• Observe customer behavior

If you use third-party data, identify reputable sources to provide the information you want.

• How to conduct market research

Every business will do market research differently. The sources, the methods of data collection, and how you’ll use that data are entirely up to you. 

However, the core steps you should take remain the same. Here’s my recommendation for how to structure your research efforts:

1. Start by identifying your target market

Imagine that someone walks into your business, reaches out online, or picks up the phone and calls you. 

It’s your perfect customer: someone who has the problem that you solve and is willing to spend money on your solution. 

Now imagine the details about this person. Who are they? Can you describe them?

Ideal customers and common traits

This “ideal customer” is your target market . Your business might have several target markets, but it will usually serve you best to keep your list of target customers to two or three.

Each of your target markets should share common traits . These might be demographic traits such as: 

• Income levels
• Locations 

They might be psychographic traits—groups of people that like the same things or have similar interests. Or, your target market might be a certain type of employee at another company, such as a Chief Technology Officer or head of marketing.

Most often, target markets are blends of demographic and psychographic groups. For example, you might develop a new type of shoe targeted at female triathletes. Or you might be opening a hair salon targeting urban, hipster men.

Further Reading: Why niche audiences are important and how to find yours

Market segmentation

Creating multiple target markets for your company is doing what’s called “ market segmentation .” 

This sounds complex, but all you’re doing is dividing your target markets into different groups you hope to sell to. Each market segment might have different characteristics and buy your product or service for different reasons.

You might create different marketing campaigns or customize your product or service for each segment.

Further Reading:

Target marketing explained

Your target market is your ideal customer who needs your solution. They share common traits like age, gender, income, interests, or job roles. To start, focus your efforts on one target customer.

Consider focusing on a younger audience

Younger consumers are often overlooked in favor of older customers who currently make purchasing decisions. However, if you can crack the interests of a younger audience, it may lead to long-term loyalty.

2. Find out if your market is big enough

Are there enough potential customers to sustain you and your competitors? If the answer is no, then you need to consider changing your product or service offering.

Use the attributes you defined in the target market step and determine how many people meet your demographic, psychographic, or location criteria. I’ve got some links to resources to help you figure this out at the end of this article.

For example: If your target market only has a few thousand potential customers, you must either sell to them frequently or at a fairly high price to create a sustainable, profitable business.

Further Reading: How to use TAM, SAM, SOM to determine market size

If you are targeting an existing market with established competitors, you do what’s called industry research . 

For example, perhaps you are building a new company in the market for sports drinks or the market for cell phones. In cases like this, understanding how much people buy of existing offerings will give you the best sense of your potential market size. 

In this case, you want to look for industry reports and read trade publications for your industry. These publications often summarize the market size.

Further Reading: Differences between industry and market research explained

3. Talk to your potential customers

Once you have identified your target market, or at least made a good guess at who your target market is, you need to take the most important step in this entire market research process. 

You need to get up from your desk, leave behind your computer, and go outside. That’s right, you need to go and talk to people in your potential target markets. 

Yes, you can do online surveys and other research, but that’s no substitute for actually talking to potential customers. 

You’ll gain more insight into your customers through first-hand accounts than any survey will ever tell you.

Do this one thing, and you’ll be miles ahead of your competition. Why? Because most people skip this step. It’s intimidating to talk to strangers. What if they don’t want to buy what you plan on making?

So, don’t be like most entrepreneurs (including me!) and skip this critical step. 

It can mean the difference between success and failure. Getting this step done early will help you refine your business model and make a clear impact on your future success.

Further Reading: How to Create a Market Penetration Strategy  

4. Identify and analyze your competitors

Part of understanding your customers is knowing what solutions they already use. 

These are your competitors, and they may directly compete with you or provide a reasonable substitution customers settle for. 

You’ll understand how to position your business to take advantage of potential opportunities and mitigate risks by analyzing who they are, what they do, and how customers respond.  

Document your known competitors

To keep things simple, start by listing your known competitors . Account for businesses that offer a similar product/service, and those that indirectly compete with their solution or industry expertise. 

Example:   You operate an outdoor goods retail store. Your mission is to provide hands-on direction for customers to find camping, hiking, and survival gear that they will love. You offer a wide selection of well-known brands, local options, and in-house creations.

Your direct competitors are the large brands themselves, less niche retail stores, and online sellers. You must also account for other businesses that provide expert-level information on outdoor activities. 

They likely don’t sell the products, but may provide guided tours, reviews, or other insights that overlap with your business. 

Analyze your competitors

Once you have your list, it’s time to get to know the competition. Check out their websites, social media, customer reviews, and news stories from the last year. 

Sign up for their email lists, visit their stores (if they have them), and track down any industry reports that give you an idea of their size, performance, and strategic direction.

You don’t have to do everything I just listed. But you must go deep enough to clearly understand your competitors and why potential customers may choose them over you. 

It may even be useful to use the SWOT analysis framework to provide additional structure for your research. 

Further Reading: 10 ways to determine what your competitors are doing

5. Document your findings

The final (and easiest) step is to document your findings. How formal your documentation is will depend on how you plan on using it.

If you only need to share your findings with business partners and others in your business, then you can probably communicate fairly informally. 

However, if you’re looking for investors for your business, you may need to write a more formal market analysis and do a market forecast.

Presenting your market research

The single piece of documentation that every business should create is a buyer persona . 

A persona is a description of a person that hits on all of the key aspects of your target market. And, just like you might have several target markets for your business, you might have several different buyer personas.

Creating a buyer persona converts your target marketing information from dry research into a living, breathing person. 

For LivePlan , we’ve created a persona named Garrett, who drives much of our product development. Garrett embodies the attributes of our ideal customer.

When we think about creating a new marketing campaign or developing a new feature for our products, we ask, “Would Garrett like this?” You can read about the process we used to create Garrett in this article.

How to create a detailed user or buyer persona

Visualizing your customers when reviewing a sea of data can be tricky. So, create a customer persona and turn that data into the living, breathing person you imagine your customer to be.

LivePlan customer persona example

Check out this real-world customer persona used by the business planning and management software LivePlan.

When should you conduct market research?

Market research is vital when starting a business. It will improve your product or service and help you avoid starting a business without customers.

However, market research shouldn’t be exclusive to new businesses. Conditions are bound to change, and you must stay up-to-date on your industry , competitors, and emerging trends. 

Here are a few other business events where market research can make a difference:

• Launching a new product/service or updating current features.
• Expanding into a new market.
• Consistent dips in financial performance. 
• Widespread market changes.
• New competitors enter the market.

Primary vs secondary market research explained

No matter how you decide to gather information, the methods can be boiled down to primary and secondary research. As a business owner, it’s worth understanding the basics of each type of research and how they work together.

What is primary research?

Primary research is the first-hand information collected (by you or someone you’ve hired) from customers within your market. Primary research cuts out the middleman and ensures that the results you are gathering are straight from the source. 

That’s why you should conduct primary research when validating your business idea. 

Furthermore, it can be broken down into two result categories — exploratory and specific.

Exploratory primary research

Exploratory primary research involves non-quantifiable customer feedback. This means you’re not trying to measure results but to record interest or an emotional response. You’ll accomplish this by asking open-ended questions in formats like focus groups or 1:1 interviews.

Asking for open-ended feedback ensures that the results are unfiltered and honest. You aren’t unintentionally leading or hindering their responses. 

Specific primary research

Specific research allows you to dig deeper into issues or opportunities you identified through your exploratory research. 

You may target a smaller segment of customers from the larger group you’ve spoken to, conduct additional interviews, or shift to more quantifiable research such as beta-testing or surveys.

What is secondary research?

Secondary research covers every other piece of data you have available. This includes resources such as:

• Public sources: Typically free and highly accessible information gathered through government-sponsored research projects. 
• Commercial sources: Research studies conducted by private organizations regarding the state of specific markets, industries, or innovations. 
• Internal sources: Data you have collected through everyday business operations. Everything from financial statements to Analytics reports can qualify.

Which is better: primary or secondary research?

Neither primary nor secondary research is better than the other. They simply have different use cases. So, aim for a healthy mix.

When starting, focus on conducting primary research to ensure you get the necessary information to validate your business. 

Compare those findings to secondary resources such as industry benchmarks , market reports, and internal data you’ve collected. 

You’ll likely leverage secondary research more consistently as you grow—but it’s wise to run primary research initiatives occasionally, especially when approaching a strategic decision. Only with both types of research will you fully understand the story of your place in the market. 

Further Reading: Types of market research explained and how to use them

Types of market research to try

1. face-to-face, remote, or phone interviews.

I mentioned this before, but the best thing you can do is get out and talk to your potential or current customers, virtually or in person. 

Be sure you have a refined set of closed and open-ended questions ready, and consider the interviewee’s tone, body language, and interest alongside their answers.

2. Focus groups

Similar to interviews, focus groups can provide direct feedback from your customer mix. Rather than receiving answers or reactions in a bubble, you get to see how customers may act when influenced by others in the market. You can simply ask questions, run product tests, or have them watch a demo.

3. Observational research

Observational research is about watching how potential customers engage with your product or service. You’re attempting to understand what roadblocks or frustrations they may be hitting, what functionality seems to resonate, what they want from your business, etc.

To conduct observational research, you can set up an official testing environment that you control. Or you can just go out and observe your potential customers and see how they shop, make purchases, and what factors encourage or deter them from purchasing.

4. Pricing research

You may include questions about pricing when conducting interviews or focus groups, but you can also specifically develop research around pricing. 

This can be anything from testing different pricing options on your website ( A/B testing ), offering discounts to exclusive segments, or running ad campaigns with different pricing positions. The goal is to understand what your customers are willing to pay and what they consider a fair price .

5. Brand awareness research

This type of research is about understanding if your target market knows about your brand and how much they happen to know. What do they associate with your brand? What competitors come to mind first?

It’s a great way to understand your current market penetration and who your competitors are. You can integrate this type of questioning within your other tests or conduct surveys to get this data.

6. Customer interest

As part of your initial validation process, you should try to understand current customer interest. At its most basic, you’re asking: Are customers willing to buy your product or service? 

You can simply ask questions and look for yes or no answers, but it may be wise to run a limited-time sale or pre-sale to actually line up initial revenue for your business. 

You can offer the chance to purchase during your interviews or focus groups, as well as run pre-orders through a simple landing page or by measuring engagement with a paid ad campaign.

7. Customer satisfaction

This research will help you understand current customer loyalty and what it will take to get customers to come back. Again, you can do this research within focus groups or interviews. 

Still, you can also test loyalty programs, limited-time promotions, customer service initiatives, and other ways to improve customer loyalty. 

Market research tools and resources

Finding market research data depends on the market you are targeting and the industry you are in. 

Here are a few of my go-to sources for market research:

• U.S. Census : If you’re opening a business in the U.S., the U.S. Census site is a goldmine of information. Check out the Census Business Builder to get population data and data on how much people spend in a given area on your type of business.
• Bureau of Labor Statistics : Another U.S.-centric resource, but a fantastic site for information on specific industries: hiring and expense trends as well as industry sizes. If your target market is other businesses, this is a good place to look for data.
• Consumer Expenditure Survey : If you want to know what people spend their money on, this is your source.
• SBDCNet Business Snapshots : You’ll find a great collection of industry profiles that describe how industries are growing and changing, who their customers are, and what typical startup costs are. You should also check out their list of market research resources, sorted by industry .
• ChatGPT : All data generated from AI models like ChatGPT must be verified. But it can still be an excellent market research assistant. With the right prompting, you can generate customer segments, understand their nuances, and prioritize them based on your needs.

Further Reading: 21 best market research resources for small businesses

Market research informs your startup decisions

Effective market research can help you avoid costly mistakes early on in the life of your business. 

However, it should remain a core practice that you regularly implement when approaching crucial business decisions, growth opportunities, or just to reaffirm your understanding of the market. 

Revisit this framework whenever you’re approaching a key strategic decision . Confirm that you still understand your customers, competitors, and where the market is headed.

Then use this information to inform your planning and adjust your strategy if necessary.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Before conducting market research
• When to conduct market research
• Primary vs secondary research
• Types of market research
• Tools and resources
• Market research informs your decisions

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What is Primary Research? Types, Methods, Examples

Appinio Research · 18.09.2023 · 11min read

Have you ever wondered how businesses and researchers gather those fresh insights that drive innovation and decision-making? That's where primary research steps in. In a world where information is gold, primary research acts as a direct channel to tap into the thoughts, behaviors, and preferences of people. Whether you're exploring new market trends, fine-tuning a product, or understanding human behavior, primary research is your compass for navigating the sea of possibilities.

What is Primary Research?

Primary research is the systematic process of gathering original data directly from individuals , sources, or phenomena to address specific research questions or objectives. This firsthand approach involves designing and conducting research methods such as surveys and interviews to generate unique insights and information tailored to the researcher's specific area of inquiry. Primary research enables researchers to collect relevant, accurate, and directly applicable data to their research goals, providing a foundation for deeper understanding and informed decision-making.

Benefits of Primary Research

Primary research offers many advantages that contribute to its effectiveness and relevance. Here are the key benefits that make primary research a powerful tool for generating insights:

• Tailored to Your Objectives: Primary research is custom-designed to address your specific research questions and objectives.
• Fresh and Current Data: Data collected is up-to-date and reflects the current context, ensuring relevance.
• Control over Methodology: You fully control the research design , methods, and data collection process .
• In-depth Exploration: Primary research allows for a thorough investigation of complex topics, uncovering deeper insights.
• Unique Insights: You gain direct access to unique insights, viewpoints, and behaviors from participants.
• Customizable Approach: You can adapt your research approach as new insights emerge, enhancing flexibility.
• High Data Quality: With careful planning and execution, primary research yields accurate, high-quality data.
• Personal Engagement: Engaging directly with participants enables a unique understanding of their experiences.

Primary vs. Secondary Research

While primary research involves collecting new data, secondary research involves analyzing existing data gathered by others. Secondary research is useful for building context, identifying trends, and gaining insights from previous studies. However, primary research provides you with unique insights and a firsthand understanding of your subject.

How to Plan Your Primary Research?

Before embarking on your primary research journey, thorough planning is essential to ensure its success.

1. Define Research Objectives and Questions

Clearly defining your research objectives and questions is the foundation of effective primary research. Ask yourself:

• What information do you seek to uncover?
• What are your goals and expectations from this research?

2. Choose the Research Method

Select a method that aligns with your research objectives. Common methods include surveys, interviews, observations, experiments, case studies, and focus groups, each with strengths and limitations.

3. Select the Target Audience and Participants

Identify the individuals, groups, or subjects you want to study. Your target audience will determine the relevance of your findings. Ensure your sample size is representative of your target population.

Types of Primary Research Methods

Primary research offers a diverse range of methods to gather data directly from sources, enabling you to gain unique insights and answers to your research questions. Each method has its strengths, and the choice of method depends on your research objectives, the nature of your subject, and the available resources.

Surveys and Questionnaires

Surveys and questionnaires are widely used methods to collect data from a large number of participants. You present a series of structured questions, which participants respond to by selecting predefined choices or providing open-ended answers.

Surveys are efficient for obtaining quantitative data and are suitable for studying opinions, preferences, behaviors, and demographics. Online platforms, such as Appinio and Google Forms, facilitate easy distribution and data collection.

Interviews involve direct conversations between the researcher and participants. Interviews can be structured, semi-structured, or unstructured.

• Structured interviews follow a predetermined set of questions, allowing for standardized data collection.
• Semi-structured interviews have a flexible format, allowing for a deeper exploration of responses.
• Unstructured interviews encourage open discussions and follow the natural flow of conversation.

Interviews are valuable for gathering rich qualitative data and insights into participants' experiences, thoughts, and emotions.

Observational Research

Observational research involves systematically observing and recording behaviors, interactions, and occurrences in natural settings. Researchers can be either active participants or passive observers. This method is ideal for studying behavior patterns, social interactions, and environmental influences.

Observational research provides a window into real-world behaviors without the potential bias that can arise from self-reporting. It requires careful planning to ensure data collection is consistent and objective.

Experiments and A/B Testing

Experiments involve manipulating variables to study cause-and-effect relationships. Researchers create controlled environments to test hypotheses and assess how changes in one variable impact another.

In contrast, A/B testing is a specific form of experimentation used in marketing and product development. It compares two versions (A and B) of a variable, such as a website layout or email subject line, to determine which performs better.

Experiments and A/B testing are powerful for establishing causal relationships and measuring the impact of interventions.

Case Studies and In-depth Analysis

Case studies involve an in-depth examination of a single subject, context, or phenomenon.

Researchers gather and analyze various data sources, such as interviews, documents, and observations, to provide a holistic understanding.

Case studies are valuable for exploring complex issues in detail and generating nuanced insights. While they lack generalizability due to their focus on specific instances, case studies contribute rich contextual information to the research landscape.

Focus Groups and Group Discussions

Focus groups gather a small group of participants to discuss specific topics guided by a moderator. These discussions encourage participants to share their opinions, perceptions, and experiences, fostering interaction and generating qualitative data.

Focus groups are valuable for exploring collective perspectives, identifying shared trends, and uncovering diverse viewpoints. The dynamic nature of group interactions can lead to the emergence of unexpected insights.

When selecting a primary research method, consider factors such as the nature of your research question, the level of detail you require, the resources available, and the preferences of your target audience. Combining multiple methods or triangulating data from different sources often enhances the validity and depth of your findings.

By choosing the suitable primary research method for your project, you can gather meaningful insights that contribute to your understanding of the subject at hand.

Primary Research Examples

To better understand how primary research is applied in various fields, let's explore some real-world examples that showcase the diversity and effectiveness of different primary research methods:

Example 1: Consumer Preferences Survey

• Research Objective: A cosmetics company wants to introduce a new skincare product line and wants to understand consumer preferences and needs.
• Method: The company designs an online survey targeting a wide demographic of potential customers. The survey includes questions about preferred skincare ingredients, product formats, packaging design , and price range.
• Outcome: By analyzing the survey responses, the company identifies that a majority of participants prioritize natural ingredients and prefer sustainable packaging. This insight guides the company's product development strategy and marketing messaging.

Example 2: Product Usability Experiment

• Research Objective: A software company wants to improve the user interface of its mobile app to increase user satisfaction and engagement.
• Method: The company conducts an experiment where users are randomly assigned to two groups: one uses the existing app interface (Group A), and the other uses a redesigned interface (Group B). User interactions, time spent on the app, and user feedback are measured.
• Outcome: The experiment reveals that Group B users spend more time on the app, complete tasks faster, and provide more positive feedback. This indicates that the redesigned interface enhances user experience, prompting the company to implement the changes for all users.

Example 3: New Product Concept Exploration

• Research Objective: An electronics company wants to develop a new wearable device and seeks input from potential users.
• Method: Researchers organize focus group sessions with participants who fit the target demographic for the wearable device. Participants are encouraged to share their thoughts, expectations, and concerns regarding the device's features and usability.
• Outcome: Focus group discussions reveal that participants are interested in a device with health monitoring capabilities but are concerned about data privacy. This feedback guides the company in refining the product concept to address user needs and alleviate concerns.

Primary Research Limitations

While primary research offers numerous benefits, it also comes with inherent limitations. Being aware of these limitations is essential for conducting rigorous and well-rounded research:

• Resource Intensity: Primary research can be time-consuming and require significant resources in terms of manpower, budget, and time.
• Cost: The costs associated with participant recruitment, data collection tools, and analysis can be substantial.
• Subjectivity: Researchers' biases can unintentionally influence data collection, analysis, and interpretation.
• Limited Generalization: Findings from primary research might not be easily generalized to larger populations due to sample size limitations.
• Data Collection Challenges: Collecting accurate data can be challenging, particularly in sensitive topics or hard-to-reach populations.
• Potential for Error: Mistakes in survey design, data entry, or analysis can introduce errors in the research findings.
• Ethical Considerations: Ensuring ethical treatment of participants, informed consent, and privacy protection is vital but can be complex.
• Validity and Reliability Concerns: Ensuring the validity and reliability of data requires careful planning and execution.

Primary research is your direct line to understanding your customers, improving products, and making smarter decisions. It's like having a conversation with your audience, getting insights straight from the source. Whether you're asking them questions, watching their behaviors, or testing new ideas, primary research gives you the real-deal information you need to stay competitive and relevant.

Remember, primary research isn't just for big corporations – even small businesses can tap into its power. By listening to your customers and adapting based on their input, you're not only meeting their needs but also building a stronger, customer-focused brand.

How to Conduct Primary Research in Minutes?

At Appinio , we're not just a market research platform but your partner in propelling your business forward. Imagine having the power to harness real-time consumer insights effortlessly, enabling you to make swift, data-driven decisions that fuel your success.

• Real-Time Insights: Instantly tap into a wealth of real-time consumer insights that propel your strategies forward.
• Seamless Integration: Appinio seamlessly merges into your decision-making processes, ensuring research is a natural part of your business rhythm.
• Intuitive Interface: Our platform is designed to be intuitive, making the world of market research accessible to everyone.

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Primary Market Research: Guide & Examples

Primary market research gives you the direct feedback you need, from those who matter most to your business.

By knowing what makes people tick, and what ticks them off – you can tailor your positioning, messaging, and approach.

Ready to find out more about the what, why, when, and how to do primary market research right?

Then let’s begin:

What is primary market research?

Primary market research is direct, first-hand data collection by an individual or organization. The most popular form of primary research is market research surveys .  But, other primary research methods like focus groups, interviews, and observational research deliver vital insights that can shape and determine critical strategies for efficient growth.

Why is primary market research important?

Primary market research helps organizations:

• Predict future trends
• Understand industry challenges
• Optimize offerings
• Create impactful messaging
• Answer specific questions that shape strategies, marketing, products, operations, and more.

Pros and cons of primary market research

As with all types of market research , there are pros and cons to consider before choosing which route is best.

Let’s take a look at them now.

Benefits of primary market research

• Control With primary market research, you control how you collect data and how it will be used.
• Relevance As data is collected first-hand, you can ensure the questions are relevant to your area of interest.
• Ownership The data belongs to you, and it’s information your rivals won’t be able to access.
• Deep insights By listening to the thoughts and opinions of an audience, you obtain a depth of insight that no other form of research alone can uncover.
• Accuracy and timeliness You have confidence that responses are relevant to the present-day consumer and market conditions.

Disadvantages of primary market research

Primary market research does have some limitations. Here are three to consider.

• Cost Most types of primary market research cost more than secondary research methods. From the design and set-up to collating results ready for analysis, it all comes at a cost.
• Time Primary market research takes longer to plan, do, and review than secondary research . If a large sample size is required, this adds to the time needed.
• Bias In some situations, an individual might be biased based on previous experience. Or, they might not fully understand the questions being asked. This can happen a lot with surveys, so consideration should to be given to inaccuracies.

11 Ways to do Primary Research

Knowing which type of primary research is right for you will depend on the problem you’re trying to solve and the questions you want to answer.

Here are 11 of the most popular primary market research methods being used today.

Telephone Interviews

These are useful with customers or prospects, and they’re also fairly easy to arrange and conduct. When creating interview questions, ask open-ended questions to get unrestricted answers.

In-depth Interviews (IDIs)

These are focused interviews with people of strategic importance, and follow a structured or unstructured format. You can either follow a specific set of questions or conduct a free-flowing interview that allows for greater flexibility. An IDI usually lasts for between 20-30 minutes.

Pro Tip: Beware of bias

Ethnographic research

This focuses on following individuals, one at a time. A trained observer will immerse themselves in an environment (think a store or home), and observe how people behave and interact with the things around them. Brand marketers, product developers, and designers then benefit from seeing and understanding these interactions. It requires more time and money compared to other methods.

• Observational research

Observational research is often favored by smaller businesses and startups and monitors numerous people in a single location. Here, one person gathers insights from a large group in a single session or day, making it cost-efficient. The researcher focuses on how people stop outside a store, if there are specific things they seem drawn to in a display, and the direction they take when heading inside.

Minimum Viable Testing (MVP) testing

Involves testing a product or new feature before it’s taken to market. The goal is to gauge a market’s reaction and gain feedback to improve or adapt future features. There are two ways to do this.

• Prototyping – where you create numerous product variants that a smaller group of people evaluate to determine which would best meet their needs.
• Post-product launch – this is designed to measure the general reaction of a target audience and helps organizations know which direction is best to move in.

Product/Field trials

Doing trials is a great way to get feedback about the product or their experiences. This can be particularly useful for product development and marketing. In field trials, variables and hypotheses can be tested in a controlled environment or in the field.

Although lots of companies use free trials as a conversion path, it’s also an incredibly valuable way to get feedback from users about the things they like or dislike, as well as potential features they’d like to see in the future.

• Hypothesis testing

Used with existing products through either multivariate or A/B testing . This type of research can help with things like pricing evaluation across different audiences or markets. It can also look into web page specifics, conversion effectiveness, and more. By taking an experimental approach, it helps organizations establish optimal strategies for product, pricing, positioning, and core messaging.

In a primary market research context, Market research surveys capture numerical data for a relatively low cost. Online surveys are quick to set up and easily sent to both existing and prospective customers. When used in primary market research, it’s important to get the length just right. Go too long; boredom creeps in they’ll give up. Too short, and you risk not getting enough viable data for a complete picture.

Pro Tip: If you’re targeting an important group of people with a survey, consider an incentive.

Why? The National Center for Biotechnology Information ( NCBI ) conducted almost 50 separate studies on the topic; their findings confirmed that monetary incentives doubled the number of completed responses. From charitable donations and gift cards to PayPal credits, people are more likely to complete surveys when there’s something in it for them.

• Intercept surveys

If you’ve ever spotted a tablet asking you to rate the service or experience you had in a store/facility; then you’ve experienced intercept surveys at work!

One of the biggest advantages of intercept surveys is they target all visitors. Unlike traditional survey formats that require an email address, this style of survey can reach all demographics, and give you instant feedback. What’s more, they’re easy to organize and analyze.

• Online focus groups

These days, most organizations tend to favor online focus groups. Organizing and expending is far easier as there’s no need to factor in travel, venue hire, and sustenance costs. It’s also far easier to get people to commit to a quick video focus group compared to in-person set-ups.

• In-person focus groups

Physical focus groups are still strong, and people prefer them for many reasons. Body language is far easier to interpret when people are in the same location, and there’s the added benefit of stronger in-group dynamics too. So, while they cost more, take a little longer to organize, and you have the added burden of knowing whether or not participants will show up, there are still plenty of reasons to use them. Convenience isn’t always king.

The difference between primary and secondary research

3 primary market research examples

There are many methods of primary market research at a company’s disposal. Finding the right type for your research goal, budget, and time considerations is key to unlocking success. Here are three examples of primary market research in action, to give you a touch of inspiration.

1. Ethnographic research

I spoke directly with Umair Syed of Bizitron, he explained how his digital market agency favors ethnographic research for uncovering key consumer insights for big brands.

2. Customer satisfaction survey – low-cost example of primary research

This is a great primary market research example in action using an online survey format. Customers are asked if they’d like a receipt emailed: if they do, they receive a survey after their visit. Key questions provide the organization with clear ratings around their experience. Open-text boxes are also used to gather specifics if a score is particularly good or bad.

3. Focus groups & interviews

Another widely used primary market research method is the interview. Here’s a sample of some of the focus group questions we use at Similarweb. The biggest advantage of using this format is that any audience can be reached and interviewed remotely. Costs are low, and you can reach a wide and varying audience with granular feedback.

While it takes time to conduct this type of primary market research, it gives organizations the ability to pick and choose who they want to speak with and opens up the floor to ask them very specific, open-ended questions that have the power to deliver insights you might not be able to get from other primary research methods.

Primary market research questions

If you run a trial or release an MVP, you can use a survey for primary market research questions like these:

• What was your most favorite feature of the product?
• If you could improve one thing about the product, what would it be and why?
• How much money would you pay for this product?
• How frequently did you use the product during the trial?
• Did you use the product during the morning, afternoon, or evening most?
• Would you recommend this product? If yes or no, why?
• Did anything occur during the trial that would prevent you from using the product in the future?

If you want to conduct an interview, here are some examples of the typical types of primary research questions you might ask.

• Can you tell me your role?
• What are your responsibilities? What are your main challenges?
• Do you have KPIs? If so, what are they?
• Who do you report to?
• How often do you use our product?
• In which context? What are you trying to achieve?
• How do you perceive our product as a tool for market research ?
• Do others in your team use this product? For what reasons? What is the structure of your team?
• What other tools do you use to perform your job? Why?
• Can you explain your main challenges with this product?
• What are the features you use most often? Why?
• Which features do you use least often? Why?
• What would make your workflow easier?
• Is there anything else on your wishlist?

How to do primary market research

• Determine what the subject or aim of the research is.
• Use secondary research first to validate the subject.
• Set out a clear problem statement or research question to be answered.
• Set objectives, and decide what you’d like to achieve.
• Outline timeframes and set relevant deadlines.
• Pick the right primary market research methods to help you get the information you need.
• Decide on your sample size – large or small.
• Consider whether you’ll use qualitative or quantitative research (a little of both is best practice).
• Outline the structure for your plan, then review it to validate if it supports your research question. Consider, whether it will give you the information needed to make decisions about the next steps.
• Test to ensure it works and delivers the right type of insights.
• Collate and analyze the results.

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Similarweb Research Intelligence gives you instant access to data that shows you things like audience insights , search interests, overlap , loyalty , and demographics .

Let’s say you’re planning to expand into a new category, and want to research the market to capture a new audience or understand consumer demand before you spend time and resources on product development.

For example, launching a new urban e-bike service. You’ll want to reach a new audience but the problem is you don’t know what their interests are and how to approach them.

You’ll want to find out:

• Who is your target audience?
• How are your competitors approaching them?
• Which channels work best for your audience?
• When is the right time to engage with them?

Step 1: Identify the audience and categorize based on search interests

The first step is to identify the ideal customer profile of your target audience that you want to capture, so this could be various attributes. For the e-bike example, you’ll want to be engaging with people who are fit to cycle or have a need. For instance, they commute to work by bike or enjoy cycling as a hobby outside of work.

• Fit to cycle
• Need to cycle (i.e., cycle to work)
• Like to cycle (outdoors lovers)
• Are interested in a healthy lifestyle (eat well, lose weight, exercise, work-life balance)

Other criteria could be around lifestyle i.e., they want to live a balanced and healthy life. You can identify your audience through different ways, such as what they search for online or what they post on social media. For this example, we’ll dive into the healthy lifestyle audience cohort and build a profile around the search term “healthy snacks”.

Using search terms such as ‘healthy snacks’ you can build a list of keywords. And group these keywords to essentially build a profile of your audience.

With this list, you can identify the types of sites that engage with your target audience, and establish the total addressable market based on search volume and trends over time.

Here we can see the volume of searches for healthy snacks has a monthly average of 77,000 in the UK, along with the key players who capture traffic from this search term.

Step 2: Qualify your audience

The next step is to identify sites and mobile apps targeting your audience i.e., people searching for “healthy snack” and find sites based on relevant criteria such as age, gender, or type of site. Then you can expand your list by identifying other sites visited by the same audience and discover which of your competitors (in this case, similar cycle makers) are working with them.

Here you can qualify the audience based on the sites that also target the “healthy snack” consumers, for example, Women’s Health, and dive into the demographics of that publication to see the gender split and age distribution.

You can also expand this list by looking at Women’s Health readers and seeing which similar sites they cross-browse to build a richer view of their online media consumption and habits.

You can also further deepen your knowledge of each publication that attracts the “healthy snack” audience and see how your competitors, in this case, other cycle makers, work with the publication.

Either by identifying other sports and fitness sites that send traffic to Women’s Health or a list of advertisers that typically promote their products.

Step 3: Monitor your audience to track ongoing changes

The final step is to build a dashboard with key metrics that include all the main audience profiles such as search interests, demographics, other visited sites partners, and advertisers so you can monitor trends and changes over time.

This can be repeated for each audience cohort you create, so you can build a holistic overview of audience behavior online and discover consumer demand within minutes, not weeks or months.

Wrapping up… Primary market research takes time. Once you’ve done the initial planning, coordination, and data collection, only then can you start to collate and analyze your findings. In some cases, it’s exactly what you need to power up your growth. On the other hand, you may need to work faster than primary market research permits. Whether it be to stay ahead of your rivals, keep up with shifting markets, or a change in consumer behavior.

If you need to quickly see what’s happening, Similarweb Digital Research Intelligence is the best tool for the job.

Take it for a trial run (for free) today.

Stop Guessing, Start Analyzing

Get actionable insights for market research here

What is primary market research used for? Primary market research helps organizations obtain direct feedback from a market that’s relevant, up to date, and usually focused on a specific theme or subject. It’s more controlled compared to secondary research and delivers more objective findings.

What is the difference between primary market research and secondary market research? Primary market research is the first-hand collection of data, that’s later analyzed and used to inform strategic decisions. The purpose of secondary research is largely the same, but this type of research takes pre-existing information, which costs less and is usually quicker to obtain.

What are primary market research examples? The most popular primary market research methods include:

• Telephone interviews
• In-depth interviews
• Ethnographical research
• MVP testing
• Product and field trials
• Online surveys

What technology is used in primary market research? Modern primary market research involves using artificial intelligence, machine learning, and data analysis tools to collect and analyze data more quickly and accurately than ever. Automated survey tools and virtual reality simulations may also be employed.

How can Similarweb help with primary market research? Similarweb can provide helpful insights into primary market research. It can provide data on website traffic , user engagement metrics , and competitors’ performance . This data can be used to make more informed decisions about product development and marketing strategies. In addition, Similarweb can provide market insights and help identify potential target audiences.

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How to Create a Market Research Plan

Before starting a business, you want to fully research your idea. A market research plan will help you understand your competition, the marketplace and more.

Table of Contents

While having a great idea is an important part of establishing a business, you’ll only get so far without laying the proper groundwork. To help your business take off, not only do you need to size up the competition, but you also need to identify who will buy your product, how much it will cost, the best approach to selling it and how many people will demand it.

To get answers to these questions, you’ll need a market research plan, which you can create yourself or pay a specialist to create for you. Market research plans define an existing problem and/or outline an opportunity. From there, the marketing strategy is broken down task by task. Your plan should include objectives and the methods that you’ll use to achieve those objectives, along with a time frame for completing the work.

What should a market research plan include?

A market research plan should provide a thorough examination of how your product or service will fare in a defined area. It should include:

• An examination of the current marketplace and an analysis of the need for your product or service: To know where you fit in the market, it’s important to have a broad understanding of your industry — covering everything from its annual revenue to the industry standards to the total number of businesses operating within it. Start by gathering statistical data from sources like the U.S. Bureau of Labor Statistics and BMI Research and consider the industry’s market size, potential customer base and how external factors such as laws, technology, world events and socioeconomic changes impact it.
• An assessment of the competition: By analyzing your competitors, you can discover strategies to fill market gaps. This involves identifying well-known competitors and noting trends they employ successfully, scrutinizing customer feedback about businesses in your sector, such as through online reviews, and understanding competitors’ product or service offerings. This knowledge can then guide the refinement of your own products or services to differentiate them from others in the market.
• Data about customers: Identify which segment of potential customers in your industry you can effectively target, considering their demographics — such as age, ethnicity, income and location and psychographics, including beliefs, values and lifestyle. Learn about the challenges your customers face in their daily lives and determine how the features and benefits of your offerings address their needs.
• The direction for your marketing in the upcoming year: Your plan should provide a clear roadmap for your marketing strategies for the next year, focusing on approaches to distinguish your brand from competitors. Develop marketing messages that resonate with and display empathy toward your target market and find ways to address customers’ needs and demonstrate value.
• Goals to be met: Outline goals your business would like to achieve and make these goals clear to all employees on your team. Create goals that are realistic and attainable while also making a meaningful impact on the business’s growth. Consider factors including your target number of products or services, the expected number of units to sell based on market size, target market behavior, pricing for each item and the cost of production and advertising.

How to create your market research plan

Doing business without having a marketing plan is like driving without directions. You may eventually reach your destination, but there will be many costly and time-consuming mistakes made along the way.

Many entrepreneurs mistakenly believe there is a big demand for their service or product but, in reality, there may not be, your prices may be too high or too low or you may be going into a business with so many restrictions that it’s almost impossible to be successful. A market research plan will help you uncover significant issues or roadblocks.

Step 1. Conduct a comprehensive situation analysis.

One of the first steps in constructing your marketing plan is to create a strengths, weaknesses, opportunities and threats (SWOT) analysis , which is used to identify your competition, to know how they operate and then to understand their strengths and weaknesses.

Step 2: Develop clear marketing objectives.

In this section, describe the desired outcome for your marketing plan with realistic and attainable objectives, the targets and a clear and concise time frame. The most common way to approach this is with marketing objectives, which may include the total number of customers and the retention rate, the average volume of purchases, total market share and the proportion of your potential market that makes purchases.

Step 3: Make a financial plan.

A financial plan is essentia l for creating a solid marketing plan. The financial plan answers a range of questions that are critical components of your business, such as how much you intend to sell, what will you charge, how much will it cost to deliver your services or produce your products, how much will it cost for your basic operating expenses and how much financing will you need to operate your business.

In your business plan, be sure to describe who you are, what your business will be about, your business goals and what your inspiration was to buy, begin or grow your business.

Step 4: Determine your target audience.

Once you know what makes you stand out from your competitors and how you’ll market yourself, you should decide who to target with all this information. That’s why your market research plan should delineate your target audience. What are their demographics and how will these qualities affect your plan? How do your company’s current products and services affect which consumers you can realistically make customers? Will that change in the future? All of these questions should be answered in your plan.

Step 5: List your research methods.

Rarely does one research avenue make for a comprehensive market research plan. Instead, your plan should indicate several methods that will be used to determine the market share you can realistically obtain. This way, you get as much information as possible from as many sources as possible. The result is a more robust path toward establishing the exact footprint you desire for your company.

Step 6: Establish a timeline.

With your plan in place, you’ll need to figure out how long your market research process will take. Project management charts are often helpful in this regard as they divide tasks and personnel over a timeframe that you have set. No matter which type of project management chart you use, try to build some flexibility into your timeframe. A two-week buffer toward the home stretch comes in handy when a process scheduled for one week takes two — that buffer will keep you on deadline.

Step 7: Acknowledge ethical concerns.

Market research always presents opportunities for ethical missteps. After all, you’ll need to obtain competitor information and sensitive financial data that may not always be readily available. Your market research plan should thus encourage your team to not take any dicey steps to obtain this information. It may be better to state, “we could not obtain this competitor information,” than to spy on the competitor or pressure their current employees for knowledge. Plus, there’s nothing wrong with simply feeling better about the final state of your plan and how you got it there.

Using a market research firm

If the thought of trying to create your own market research plan seems daunting or too time-consuming, there are plenty of other people willing to do the work for you.

Pros of using a market research firm

As an objective third party, businesses can benefit from a market research firm’s impartial perspective and guidance, helping to shape impactful brand strategies and marketing campaigns. These firms, which can help businesses with everything from their marketing campaigns to brand launches, deliver precise results, drawing on their expertise and experience to provide in-depth insights and solutions tailored specifically to your company’s needs. 

Even more, working with a market research firm can elevate a brand above the competition, as they provide credible and unique research that is highly valued by the media, enhancing brand credibility and potentially increasing website traffic, social media shares and online visibility.

Cons of using a market research firm

Although hiring a firm can provide businesses with tremendous results, certain downsides can lead a business toward the do-it-yourself route. Most notably, market research firms can be a costly expense that some businesses can’t afford. However, businesses that can allocate the funds will likely see a positive return on investment, as they are paying for the expertise and proficiency of seasoned professionals in the field.

Additionally, finding the right market research firm for your business’s needs can take some time — and even longer, ranging from weeks to months, for a market research firm to complete a plan. This lack of immediate results can be detrimental for businesses that don’t have the time to wait. 

Market research firms can charge into the thousands of dollars for a market research plan, but there are ways to get help more affordably, including:

• Outline your plans carefully and spell out objectives.
• Examine as many sources as possible.
• Before paying for any information, check with librarians, small business development centers or market research professors to see if they can help you access market research data for free.
• You may think you’ll need to spend a hefty sum to create a market research plan, but there are plenty of free and low-cost sources available, especially through university business schools that will guide you through the process.

Miranda Fraraccio contributed to this article. 

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How to Conduct Market Research for a Startup

• 17 Mar 2022

With every innovative product idea comes the pressing question: “Will people want to buy it?”

As an entrepreneur with a big idea, what’s the best way to determine how potential customers will react to your product? Conducting market research can provide the data needed to decide whether your product fits your target market.

Before launching a new venture, you should understand market research. Here’s how to conduct market research for a startup and why it’s important.

Access your free e-book today.

What Is Market Research?

Market research is the process of gathering information about customers and the market as a whole to determine a product or service’s viability. Market research includes interviews, surveys, focus groups, and industry data analyses.

The goal of market research is to better understand potential customers, how well your product or service fits their needs, and how it compares to competitors’ offerings.

There are two types of research you can conduct: primary and secondary.

• Primary research requires collecting data to learn about your specific customers or target market segment. It’s useful for creating buyer personas, segmenting your market, and improving your product to cater to customers’ needs .
• Secondary research is conducted using data you didn’t collect yourself. Industry reports, public databases, and other companies’ proprietary data can be used to gain insights into your target market segment and industry.

Why Is Market Research Important for Entrepreneurs?

Before launching your venture, it’s wise to conduct market research to ensure your product or service will be well received. Feedback from people who fall into your target demographics can be invaluable as you iterate on and improve your product.

Performing market research can also help you determine a pricing strategy by gauging customers’ willingness to pay for your product. Additionally, it can improve the user experience by revealing what features matter most to potential customers.

When assessing which startups to fund, investors place heavy importance on thorough market research that indicates promising potential. Providing tangible proof that your product fulfills a market need and demonstrating you’ve taken the time to iterate on and improve it signal that your startup could be a worthwhile investment.

Related: How to Talk to Potential Investors: 5 Tips

How to Do Market Research for a Startup

1. form hypotheses.

What questions do you aim to answer through market research? Using those questions, you can make predictions called hypotheses . Defining your hypotheses upfront can help guide your approach to selecting subjects, researching questions, and testing designs.

An example question you may ask is: “How much are people in my target demographic willing to pay for the current version of my product?” Your hypothesis could be: “If my product contains all its current features, customers will be willing to pay $500 for it.”

Another example question you may ask is: “What’s the user’s biggest pain point, and is my product meeting their needs?” Your hypothesis could be: “I believe the user’s biggest pain point is needing an easy, unintimidating way to learn basic car maintenance, and I predict that my product meets that need.”

You can and should test multiple hypotheses, but try to select no more than a few per test, so the research stays focused.

Related: A Beginner’s Guide to Hypothesis Testing in Business

2. Select the Type of Research Needed to Test Hypotheses

Once you’ve formed your hypotheses, determine which type of research to conduct.

If your hypotheses focus on determining your startup’s place in the broader market, start with secondary research. This can include using existing data to determine market size, how much of that market your startup could reasonably own, who your biggest competitors are, and how your brand and product compare to theirs.

If your hypotheses require primary research, decide which data collection method best fits your needs. These can include one-on-one interviews, surveys, focus groups, and polls. Primary research allows you to gather insights into customer satisfaction and loyalty, brand awareness and perception, and real-time product usability.

3. Identify Target Demographics and Recruit Subjects

To gather meaningful insights, you need to understand your target demographic. Do you aim to cater to working parents, young athletes, or pet owners? Determine the type of person who can benefit from your product.

If you conduct primary research, you need to recruit subjects. This can be done in several ways, including:

• Word of mouth: The simplest but least reliable way to recruit participants is by word of mouth. Ask people you know to refer others to be research subjects, then screen them to confirm they fit your target demographic.
• Promoting the study on social media: Many social media platforms enable you to show an ad to people who fall into specific demographic categories or have certain interests. This allows you to get the word out to a large number of people who qualify.
• Hiring a third-party market research company: Some companies provide full market research services and recruit participants and conduct research on your behalf.

However you recruit subjects, ensure they take a screener survey beforehand, which allows you to determine whether they fit the specific demographic you want to study or have a trait that eliminates them from the research pool. It also provides demographic data—such as age and race—that enables you to select a diverse subset of your target demographic.

In addition, you can offer compensation to boost participation, such as money, meal vouchers, gift cards, or early access to your product. Make it clear that compensation is in appreciation for subjects’ time and honest feedback.

4. Conduct the Research

Once you’ve determined the type of research and target demographic necessary to test your hypotheses, conduct your research. To reduce bias, enlist someone unfamiliar with your hypotheses to perform interviews or lead focus groups.

Ask questions based on your audience and hypotheses. For instance, if you’re aiming to test existing customers’ purchase motivations, you may ask: “What challenge were you trying to solve when you first bought the product?”

If examining brand perception, your audience should consist of potential customers who don’t yet know your brand. Present them with a list of competitor logos—with yours in the mix—and ask them to rank the brands by perceived reliability.

While the questions you ask are vehicles to prove or disprove hypotheses, ensure they don’t lead subjects in one direction. To craft unbiased research questions , use neutral language and vary the order of options in multiple-choice questions. This can keep subjects from selecting the same option each time if they sense the third option is always mapped to a certain outcome. It also helps account for primacy bias (the tendency to select the first option in a list) and recency bias (the tendency to select the final option in a list).

Once you’ve collected data, ensure it’s organized efficiently and securely so you can protect subjects’ identities .

Related: 3 Examples of Bad Survey Questions and How to Fix Them

5. Gather Insights and Determine Action Items

After you’ve organized your data, analyze it to extract actionable insights. While some of the data will be qualitative rather than quantitative, you can detect patterns in responses to make it quantifiable. For instance, noting that 15 of 20 subjects mentioned feeling overwhelmed when attempting to assemble your product.

Once you’ve analyzed the data and communicated emerging trends using data visualizations , outline action items.

If the majority of users in your target demographic reported feeling overwhelmed while assembling your product, action items might include:

• Creating different versions of assembly instructions to test with other groups, varying diagrams and instructional language
• Researching instruction manual best practices

Each round of market research can offer more information about how your product is perceived and experienced by potential users.

Market Research as an Ongoing Endeavor

While it’s useful to conduct market research before launching your product, you should revisit your hypotheses and form new ones over the course of building your venture.

By conducting market research with each version of your product, you can gradually improve it and ensure it continues to fit target customers’ needs.

Are you interested in bolstering your entrepreneurship skills? Explore our four-week online course Entrepreneurship Essentials and our other entrepreneurship and innovation courses to learn to speak the language of the startup world.

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Primary Research: What It Is, Purpose & Methods + Examples

As we continue exploring the exciting research world, we’ll come across two primary and secondary data approaches. This article will focus on primary research – what it is, how it’s done, and why it’s essential. 

We’ll discuss the methods used to gather first-hand data and examples of how it’s applied in various fields. Get ready to discover how this research can be used to solve research problems , answer questions, and drive innovation.

What is Primary Research: Definition

Primary research is a methodology researchers use to collect data directly rather than depending on data collected from previously done research. Technically, they “own” the data. Primary research is solely carried out to address a certain problem, which requires in-depth analysis .

There are two forms of research:

• Primary Research
• Secondary Research

Businesses or organizations can conduct primary research or employ a third party to conduct research. One major advantage of primary research is this type of research is “pinpointed.” Research only focuses on a specific issue or problem and on obtaining related solutions.

For example, a brand is about to launch a new mobile phone model and wants to research the looks and features they will soon introduce. 

Organizations can select a qualified sample of respondents closely resembling the population and conduct primary research with them to know their opinions. Based on this research, the brand can now think of probable solutions to make necessary changes in the looks and features of the mobile phone.

Primary Research Methods with Examples

In this technology-driven world, meaningful data is more valuable than gold. Organizations or businesses need highly validated data to make informed decisions. This is the very reason why many companies are proactive in gathering their own data so that the authenticity of data is maintained and they get first-hand data without any alterations.

Here are some of the primary research methods organizations or businesses use to collect data:

1. Interviews (telephonic or face-to-face)

Conducting interviews is a qualitative research method to collect data and has been a popular method for ages. These interviews can be conducted in person (face-to-face) or over the telephone. Interviews are an open-ended method that involves dialogues or interaction between the interviewer (researcher) and the interviewee (respondent).

Conducting a face-to-face interview method is said to generate a better response from respondents as it is a more personal approach. However, the success of face-to-face interviews depends heavily on the researcher’s ability to ask questions and his/her experience related to conducting such interviews in the past. The types of questions that are used in this type of research are mostly open-ended questions . These questions help to gain in-depth insights into the opinions and perceptions of respondents.

Personal interviews usually last up to 30 minutes or even longer, depending on the subject of research. If a researcher is running short of time conducting telephonic interviews can also be helpful to collect data.

2. Online surveys

Once conducted with pen and paper, surveys have come a long way since then. Today, most researchers use online surveys to send to respondents to gather information from them. Online surveys are convenient and can be sent by email or can be filled out online. These can be accessed on handheld devices like smartphones, tablets, iPads, and similar devices.

Once a survey is deployed, a certain amount of stipulated time is given to respondents to answer survey questions and send them back to the researcher. In order to get maximum information from respondents, surveys should have a good mix of open-ended questions and close-ended questions . The survey should not be lengthy. Respondents lose interest and tend to leave it half-done.

It is a good practice to reward respondents for successfully filling out surveys for their time and efforts and valuable information. Most organizations or businesses usually give away gift cards from reputed brands that respondents can redeem later.

3. Focus groups

This popular research technique is used to collect data from a small group of people, usually restricted to 6-10. Focus group brings together people who are experts in the subject matter for which research is being conducted.

Focus group has a moderator who stimulates discussions among the members to get greater insights. Organizations and businesses can make use of this method, especially to identify niche markets to learn about a specific group of consumers.

4. Observations

In this primary research method, there is no direct interaction between the researcher and the person/consumer being observed. The researcher observes the reactions of a subject and makes notes.

Trained observers or cameras are used to record reactions. Observations are noted in a predetermined situation. For example, a bakery brand wants to know how people react to its new biscuits, observes notes on consumers’ first reactions, and evaluates collective data to draw inferences .

Primary Research vs Secondary Research – The Differences

Primary and secondary research are two distinct approaches to gathering information, each with its own characteristics and advantages. 

While primary research involves conducting surveys to gather firsthand data from potential customers, secondary market research is utilized to analyze existing industry reports and competitor data, providing valuable context and benchmarks for the survey findings.

Find out more details about the differences: 

1. Definition

• Primary Research: Involves the direct collection of original data specifically for the research project at hand. Examples include surveys, interviews, observations, and experiments.
• Secondary Research: Involves analyzing and interpreting existing data, literature, or information. This can include sources like books, articles, databases, and reports.

2. Data Source

• Primary Research: Data is collected directly from individuals, experiments, or observations.
• Secondary Research: Data is gathered from already existing sources.

3. Time and Cost

• Primary Research: Often time-consuming and can be costly due to the need for designing and implementing research instruments and collecting new data.
• Secondary Research: Generally more time and cost-effective, as it relies on readily available data.

4. Customization

• Primary Research: Provides tailored and specific information, allowing researchers to address unique research questions.
• Secondary Research: Offers information that is pre-existing and may not be as customized to the specific needs of the researcher.
• Primary Research: Researchers have control over the research process, including study design, data collection methods , and participant selection.
• Secondary Research: Limited control, as researchers rely on data collected by others.

6. Originality

• Primary Research: Generates original data that hasn’t been analyzed before.
• Secondary Research: Involves the analysis of data that has been previously collected and analyzed.

7. Relevance and Timeliness

• Primary Research: Often provides more up-to-date and relevant data or information.
• Secondary Research: This may involve data that is outdated, but it can still be valuable for historical context or broad trends.

Advantages of Primary Research

Primary research has several advantages over other research methods, making it an indispensable tool for anyone seeking to understand their target market, improve their products or services, and stay ahead of the competition. So let’s dive in and explore the many benefits of primary research.

• One of the most important advantages is data collected is first-hand and accurate. In other words, there is no dilution of data. Also, this research method can be customized to suit organizations’ or businesses’ personal requirements and needs .
• I t focuses mainly on the problem at hand, which means entire attention is directed to finding probable solutions to a pinpointed subject matter. Primary research allows researchers to go in-depth about a matter and study all foreseeable options.
• Data collected can be controlled. I T gives a means to control how data is collected and used. It’s up to the discretion of businesses or organizations who are collecting data how to best make use of data to get meaningful research insights.
• I t is a time-tested method, therefore, one can rely on the results that are obtained from conducting this type of research.

Disadvantages of Primary Research

While primary research is a powerful tool for gathering unique and firsthand data, it also has its limitations. As we explore the drawbacks, we’ll gain a deeper understanding of when primary research may not be the best option and how to work around its challenges.

• One of the major disadvantages of primary research is it can be quite expensive to conduct. One may be required to spend a huge sum of money depending on the setup or primary research method used. Not all businesses or organizations may be able to spend a considerable amount of money.
• This type of research can be time-consuming. Conducting interviews and sending and receiving online surveys can be quite an exhaustive process and require investing time and patience for the process to work. Moreover, evaluating results and applying the findings to improve a product or service will need additional time.
• Sometimes, just using one primary research method may not be enough. In such cases, the use of more than one method is required, and this might increase both the time required to conduct research and the cost associated with it.

Every research is conducted with a purpose. Primary research is conducted by organizations or businesses to stay informed of the ever-changing market conditions and consumer perception. Excellent customer satisfaction (CSAT) has become a key goal and objective of many organizations.

A customer-centric organization knows the importance of providing exceptional products and services to its customers to increase customer loyalty and decrease customer churn. Organizations collect data and analyze it by conducting primary research to draw highly evaluated results and conclusions. Using this information, organizations are able to make informed decisions based on real data-oriented insights.

QuestionPro is a comprehensive survey platform that can be used to conduct primary research. Users can create custom surveys and distribute them to their target audience , whether it be through email, social media, or a website.

QuestionPro also offers advanced features such as skip logic, branching, and data analysis tools, making collecting and analyzing data easier. With QuestionPro, you can gather valuable insights and make informed decisions based on the results of your primary research. Start today for free!

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How to Write a Business Plan in 9 Steps (+ Template and Examples)

Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.

If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.

Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.

You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.

Let’s get started.

What Do You Need A Business Plan For?

Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.

1. Secure Funds

One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.

For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.

A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.

Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.

2. Monitor Business Growth

A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:

• The business goals
• Methods to achieve the goals
• Time-frame for attaining those goals

A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.

You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.

3. Measure Business Success

A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.

Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.

You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.

4. Document Your Marketing Strategies

You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.

Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.

In your business plan, your marketing strategy must answer the questions:

• How do you want to reach your target audience?
• How do you plan to retain your customers?
• What is/are your pricing plans?
• What is your budget for marketing?

How to Write a Business Plan Step-by-Step

1. create your executive summary.

The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.

Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.

A good executive summary should do the following:

• A Snapshot of Growth Potential. Briefly inform the reader about your company and why it will be successful)
• Contain your Mission Statement which explains what the main objective or focus of your business is.
• Product Description and Differentiation. Brief description of your products or services and why it is different from other solutions in the market.
• The Team. Basic information about your company’s leadership team and employees
• Business Concept. A solid description of what your business does.
• Target Market. The customers you plan to sell to.
• Marketing Strategy. Your plans on reaching and selling to your customers
• Current Financial State. Brief information about what revenue your business currently generates.
• Projected Financial State. Brief information about what you foresee your business revenue to be in the future.

The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.

Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.

View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:

• Who is your target audience?
• What sector or industry are you in?
• What are your products and services?
• What is the future of your industry?
• Is your company scaleable?
• Who are the owners and leaders of your company? What are their backgrounds and experience levels?
• What is the motivation for starting your company?
• What are the next steps?

Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.

The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.

If you are writing your business plan for your planning purposes, you do not need to write the executive summary.

2. Add Your Company Overview

The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.

Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.

Your company overview should contain the following:

• What products and services you will provide
• Geographical markets and locations your company have a presence
• What you need to run your business
• Who your target audience or customers are
• Who will service your customers
• Your company’s purpose, mission, and vision
• Information about your company’s founders
• Who the founders are
• Notable achievements of your company so far

When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.

If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.

• Who are you targeting? (The answer is not everyone)
• What pain point does your product or service solve for your customers that they will be willing to spend money on resolving?
• How does your product or service overcome that pain point?
• Where is the location of your business?
• What products, equipment, and services do you need to run your business?
• How is your company’s product or service different from your competition in the eyes of your customers?
• How many employees do you need and what skills do you require them to have?

After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.

The company description or overview section contains three elements: mission statement, history, and objectives.

• Mission Statement

The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.

Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”

When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:

• Founding Date
• Major Milestones
• Location(s)
• Flagship Products or Services
• Number of Employees
• Executive Leadership Roles

When you fill in this information, you use it to write one or two paragraphs about your company’s history.

Business Objectives

Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.

3. Perform Market and Competitive Analyses to Proof a Big Enough Business Opportunity

The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.

Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.

This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.

Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?

You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.

Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?

Illustrate the competitive landscape as well. What are your competitors doing well and not so well?

Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.

Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.

Market Analysis

Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.

The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.

A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.

• Market Research

To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.

• Your target market’s needs or pain points
• The existing solutions for their pain points
• Geographic Location
• Demographics

The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.

Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.

You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.

How to Quantify Your Target Market

One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:

• Your Potential Customers: They are the people you plan to target. For example, if you sell accounting software for small businesses , then anyone who runs an enterprise or large business is unlikely to be your customers. Also, individuals who do not have a business will most likely not be interested in your product.
• Total Households: If you are selling household products such as heating and air conditioning systems, determining the number of total households is more important than finding out the total population in the area you want to sell to. The logic is simple, people buy the product but it is the household that uses it.
• Median Income: You need to know the median income of your target market. If you target a market that cannot afford to buy your products and services, your business will not last long.
• Income by Demographics: If your potential customers belong to a certain age group or gender, determining income levels by demographics is necessary. For example, if you sell men's clothes, your target audience is men.

What Does a Good Market Analysis Entail?

Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.

You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:

• Industry Description. You find out about the history of your industry, the current and future market size, and who the largest players/companies are in your industry.
• Overview of Target Market. You research your target market and its characteristics. Who are you targeting? Note, it cannot be everyone, it has to be a specific group. You also have to find out all information possible about your customers that can help you understand how and why they make buying decisions.
• Size of Target Market: You need to know the size of your target market, how frequently they buy, and the expected quantity they buy so you do not risk overproducing and having lots of bad inventory. Researching the size of your target market will help you determine if it is big enough for sustained business or not.
• Growth Potential: Before picking a target market, you want to be sure there are lots of potential for future growth. You want to avoid going for an industry that is declining slowly or rapidly with almost zero growth potential.
• Market Share Potential: Does your business stand a good chance of taking a good share of the market?
• Market Pricing and Promotional Strategies: Your market analysis should give you an idea of the price point you can expect to charge for your products and services. Researching your target market will also give you ideas of pricing strategies you can implement to break into the market or to enjoy maximum profits.
• Potential Barriers to Entry: One of the biggest benefits of conducting market analysis is that it shows you every potential barrier to entry your business will likely encounter. It is a good idea to discuss potential barriers to entry such as changing technology. It informs readers of your business plan that you understand the market.
• Research on Competitors: You need to know the strengths and weaknesses of your competitors and how you can exploit them for the benefit of your business. Find patterns and trends among your competitors that make them successful, discover what works and what doesn’t, and see what you can do better.

The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.

Here are some questions you can answer that can help you position your product or service in a positive light to your readers.

• Is your product or service of superior quality?
• What additional features do you offer that your competitors do not offer?
• Are you targeting a ‘new’ market?

Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.

Competitive Analysis

In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.

Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.

Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.

The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.

Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.

When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.

Find answers to the following questions after you have identified who your competitors are.

• What are your successful competitors doing?
• Why is what they are doing working?
• Can your business do it better?
• What are the weaknesses of your successful competitors?
• What are they not doing well?
• Can your business turn its weaknesses into strengths?
• How good is your competitors’ customer service?
• Where do your competitors invest in advertising?
• What sales and pricing strategies are they using?
• What marketing strategies are they using?
• What kind of press coverage do they get?
• What are their customers saying about your competitors (both the positive and negative)?

If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.

If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.

Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.

The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.

Direct vs Indirect Competition

You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.

There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.

If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.

In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.

For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.

There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.

Factors that Differentiate Your Business from the Competition

There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.

1. Cost Leadership

A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.

A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.

2. Product Differentiation

Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.

Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.

3. Market Segmentation

As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.

If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.

4. Define Your Business and Management Structure

The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.

Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.

If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.

Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.

The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.

Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.

Management Team

The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.

Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.

A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.

Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.

Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.

If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.

Key Questions to Answer When Structuring Your Management Team

• Who are the key leaders?
• What experiences, skills, and educational backgrounds do you expect your key leaders to have?
• Do your key leaders have industry experience?
• What positions will they fill and what duties will they perform in those positions?
• What level of authority do the key leaders have and what are their responsibilities?
• What is the salary for the various management positions that will attract the ideal candidates?

Additional Tips for Writing the Management Structure Section

1. Avoid Adding ‘Ghost’ Names to Your Management Team

There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.

Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.

2. Focus on Credentials But Pay Extra Attention to the Roles

Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.

While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.

Organizational Chart

Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.

If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.

An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.

You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.

5. Describe Your Product and Service Offering

In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.

Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.

The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.

If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”

Your product and service section in your business plan should include the following:

• A detailed explanation that clearly shows how your product or service works.
• The pricing model for your product or service.
• Your business’ sales and distribution strategy.
• The ideal customers that want your product or service.
• The benefits of your products and services.
• Reason(s) why your product or service is a better alternative to what your competitors are currently offering in the market.
• Plans for filling the orders you receive
• If you have current or pending patents, copyrights, and trademarks for your product or service, you can also discuss them in this section.

What to Focus On When Describing the Benefits, Lifecycle, and Production Process of Your Products or Services

In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.

When describing the benefits of your products or services, here are some key factors to focus on.

• Unique features
• Translating the unique features into benefits
• The emotional, psychological, and practical payoffs to attract customers
• Intellectual property rights or any patents

When describing the product life cycle of your products or services, here are some key factors to focus on.

• Upsells, cross-sells, and down-sells
• Time between purchases
• Plans for research and development.

When describing the production process for your products or services, you need to think about the following:

• The creation of new or existing products and services.
• The sources for the raw materials or components you need for production.
• Assembling the products
• Maintaining quality control
• Supply-chain logistics (receiving the raw materials and delivering the finished products)
• The day-to-day management of the production processes, bookkeeping, and inventory.

Tips for Writing the Products or Services Section of Your Business Plan

1. Avoid Technical Descriptions and Industry Buzzwords

The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.

A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.

2. Describe How Your Products or Services Differ from Your Competitors

When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.

If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.

For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.

3. Long or Short Products or Services Section

Should your products or services section be short? Does the long products or services section attract more investors?

There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.

If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.

Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.

The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.

If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.

A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.

4. Describe Your Relationships with Vendors or Suppliers

Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.

Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.

5. Your Primary Goal Is to Convince Your Readers

The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.

When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.

While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.

Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.

Key Questions to Answer When Writing your Products and Services Section

Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.

• Are your products existing on the market or are they still in the development stage?
• What is your timeline for adding new products and services to the market?
• What are the positives that make your products and services different from your competitors?
• Do your products and services have any competitive advantage that your competitors’ products and services do not currently have?
• Do your products or services have any competitive disadvantages that you need to overcome to compete with your competitors? If your answer is yes, state how you plan to overcome them,
• How much does it cost to produce your products or services? How much do you plan to sell it for?
• What is the price for your products and services compared to your competitors? Is pricing an issue?
• What are your operating costs and will it be low enough for you to compete with your competitors and still take home a reasonable profit margin?
• What is your plan for acquiring your products? Are you involved in the production of your products or services?
• Are you the manufacturer and produce all the components you need to create your products? Do you assemble your products by using components supplied by other manufacturers? Do you purchase your products directly from suppliers or wholesalers?
• Do you have a steady supply of products that you need to start your business? (If your business is yet to kick-off)
• How do you plan to distribute your products or services to the market?

You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.

6. Show and Explain Your Marketing and Sales Plan

Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.

The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.

There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.

In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.

Outline Your Business’ Unique Selling Proposition (USP)

The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).

Target Market and Target Audience

Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.

Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.

Creating a Smart Marketing and Sales Plan

Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.

Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.

Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.

Your Positioning Statement

Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.

Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?

Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market

• What are the unique features or benefits that you offer that your competitors lack?
• What are your customers’ primary needs and wants?
• Why should a customer choose you over your competition? How do you plan to differentiate yourself from the competition?
• How does your company’s solution compare with other solutions in the market?

After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.

All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.

Here is a simple template you can use to develop a positioning statement.

For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].

For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.

“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”

You can edit this positioning statement sample and fill it with your business details.

After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.

Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.

You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.

Basic Rules to Follow When Pricing Your Offering

Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.

• Covering Your Costs: The price you set for your products or service should be more than it costs you to produce and deliver them. Every business has the same goal, to make a profit. Depending on the strategy you want to use, there are exceptions to this rule. However, the vast majority of businesses follow this rule.
• Primary and Secondary Profit Center Pricing: When a company sets its price above the cost of production, it is making that product its primary profit center. A company can also decide not to make its initial price its primary profit center by selling below or at even with its production cost. It rather depends on the support product or even maintenance that is associated with the initial purchase to make its profit. The initial price thus became its secondary profit center.
• Matching the Market Rate: A good rule to follow when pricing your products or services is to match your pricing with consumer demand and expectations. If you price your products or services beyond the price your customer perceives as the ideal price range, you may end up with no customers. Pricing your products too low below what your customer perceives as the ideal price range may lead to them undervaluing your offering.

Pricing Strategy

Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.

• Cost-plus Pricing: This strategy is one of the simplest and oldest pricing strategies. Here you consider the cost of producing a unit of your product and then add a profit to it to arrive at your market price. It is an effective pricing strategy for manufacturers because it helps them cover their initial costs. Another name for the cost-plus pricing strategy is the markup pricing strategy.
• Market-based Pricing: This pricing strategy analyses the market including competitors’ pricing and then sets a price based on what the market is expecting. With this pricing strategy, you can either set your price at the low-end or high-end of the market.
• Value Pricing: This pricing strategy involves setting a price based on the value you are providing to your customer. When adopting a value-based pricing strategy, you have to set a price that your customers are willing to pay. Service-based businesses such as small business insurance providers , luxury goods sellers, and the fashion industry use this pricing strategy.

After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.

As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.

There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.

Advertising

Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.

Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.

Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.

A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.

Public Relations

A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.

Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.

Content Marketing

Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,

Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.

Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.

If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.

Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.

When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.

• Is your choice of packaging consistent with your positioning strategy?
• What key value proposition does your packaging communicate? (It should reflect the key value proposition of your business)
• How does your packaging compare to that of your competitors?

Social Media

Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.

You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.

Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.

Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.

You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.

Strategic Alliances

If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.

Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.

The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.

Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.

Steps Involved in Creating a Marketing and Sales Plan

1. Focus on Your Target Market

Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.

2. Evaluate Your Competition

One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.

You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.

These questions can help you know your competition.

• What makes your competition successful?
• What are their weaknesses?
• What are customers saying about your competition?

3. Consider Your Brand

Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.

4. Focus on Benefits

The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.

Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.

5. Focus on Differentiation

Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.

Key Questions to Answer When Writing Your Marketing and Sales Plan

• What is your company’s budget for sales and marketing campaigns?
• What key metrics will you use to determine if your marketing plans are successful?
• What are your alternatives if your initial marketing efforts do not succeed?
• Who are the sales representatives you need to promote your products or services?
• What are the marketing and sales channels you plan to use? How do you plan to get your products in front of your ideal customers?
• Where will you sell your products?

You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.

The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.

7. Clearly Show Your Funding Request

If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’

A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.

Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.

In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.

Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.

If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.

Funding Request: Debt or Equity?

When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.

Case for Equity

If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.

Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.

Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.

Case for Debt

You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.

When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.

Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.

Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.

You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.

Additional Tips for Writing the Funding Request Section of your Business Plan

The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.

If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.

You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.

If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .

Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.

8. Detail Your Financial Plan, Metrics, and Projections

If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.

The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.

If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.

Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.

If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.

When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.

The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.

Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.

Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.

Use Graphs and Charts

The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.

Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.

Address the Risk Factors and Show Realistic Financial Projections

Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.

You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.

What You Should In The Financial Plan, Metrics, and Projection Section of Your Business Plan

The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.

A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.

Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.

1. Sales Forecast

Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.

One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.

For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.

Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.

Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.

For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.

2. Personnel Plan

The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.

However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.

The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.

3. Income Statement

The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.

Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.

The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.

• Sales refer to the revenue your business generates from selling its products or services. Other names for sales are income or revenue.
• Cost of Goods Sold (COGS) refers to the total cost of selling your products. Other names for COGS are direct costs or cost of sales. Manufacturing businesses use the Costs of Goods Manufactured (COGM) .
• Gross Margin is the figure you get when you subtract your COGS from your sales. In your income statement, you can express it as a percentage of total sales (Gross margin / Sales = Gross Margin Percent).
• Operating Expenses refer to all the expenses you incur from running your business. It exempts the COGS because it stands alone as a core part of your income statement. You also have to exclude taxes, depreciation, and amortization. Your operating expenses include salaries, marketing expenses, research and development (R&D) expenses, and other expenses.
• Total Operating Expenses refers to the sum of all your operating expenses including those exemptions named above under operating expenses.
• Operating Income refers to earnings before interest, taxes, depreciation, and amortization. It is simply known as the acronym EBITDA (earnings before interest, taxes, depreciation, and amortization). Calculating your operating income is simple, all you need to do is to subtract your COGS and total operating expenses from your sales.
• Total Expenses refer to the sum of your operating expenses and your business’ interest, taxes, depreciation, and amortization.
• Net profit shows whether your business has made a profit or taken a loss during a given timeframe.

4. Cash Flow Statement

The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.

5. Balance Sheet

The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.

You can get the net worth of your company by subtracting your company’s liabilities from its assets.

6. Exit Strategy

The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.

You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.

Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.

Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.

Key Questions to Answer with Your Financial Plan, Metrics, and Projection

Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.

You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.

Here are some key questions to answer to help you develop this section.

• What is your sales forecast for the next year?
• When will your company achieve a positive cash flow?
• What are the core expenses you need to operate?
• How much money do you need upfront to operate or grow your company?
• How will you use the loans or investments?

9. Add an Appendix to Your Business Plan

Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.

The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.

When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.

Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.

You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.

If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.

A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.

The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.

People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.

Common Items to Include in the Appendix Section of Your Business Plan

The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:

• Additional data about the process of manufacturing or creation
• Additional description of products or services such as product schematics
• Additional financial documents or projections
• Articles of incorporation and status
• Backup for market research or competitive analysis
• Bank statements
• Business registries
• Client testimonials (if your business is already running)
• Copies of insurances
• Credit histories (personal or/and business)
• Deeds and permits
• Equipment leases
• Examples of marketing and advertising collateral
• Industry associations and memberships
• Images of product
• Intellectual property
• Key customer contracts
• Legal documents and other contracts
• Letters of reference
• Links to references
• Market research data
• Organizational charts
• Photographs of potential facilities
• Professional licenses pertaining to your legal structure or type of business
• Purchase orders
• Resumes of the founder(s) and key managers
• State and federal identification numbers or codes
• Trademarks or patents’ registrations

Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.

Tips and Strategies for Writing a Convincing Business Plan

To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.

1. Know Your Audience

When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.

The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.

Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.

• A business plan used to address a company's board members will center on its employment schemes, internal affairs, projects, stakeholders, etc.
• A business plan for financial institutions will talk about the size of your market and the chances for you to pay back any loans you demand.
• A business plan for investors will show proof that you can return the investment capital within a specific time. In addition, it discusses your financial projections, tractions, and market size.

2. Get Inspiration from People

Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.

To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.

When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.

3. Avoid Being Over Optimistic

Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.

The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.

In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.

The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.

To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.

4. Keep it Simple and Short

When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.

One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.

Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.

You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.

To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.

5. Make an Outline and Follow Through

A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.

For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.

To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.

This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:

• Table of contents
• Introduction
• Product or service description
• Target audience
• Market size
• Competition analysis
• Financial projections

Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.

6. Ask a Professional to Proofread

When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.

You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.

In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.

Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.

Business Plan Examples and Templates That’ll Save You Tons of Time

1. hubspot's one-page business plan.

The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.

Hubspot’s one-page business plan template is divided into nine fields:

• Business opportunity
• Company description
• Industry analysis
• Target market
• Implementation timeline
• Marketing plan
• Financial summary
• Funding required

2. Bplan’s Free Business Plan Template

Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.

The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.

3. HubSpot's Downloadable Business Plan Template

HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.

The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.

There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.

4. Business Plan by My Own Business Institute

My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.

The comprehensive template consists of a whopping 15 sections.

• The Business Profile
• The Vision and the People
• Home-Based Business and Freelance Business Opportunities
• Organization
• Licenses and Permits
• Business Insurance
• Communication Tools
• Acquisitions
• Location and Leasing
• Accounting and Cash Flow
• Opening and Marketing
• Managing Employees
• Expanding and Handling Problems

There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.

5. Score's Business Plan Template for Startups

Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.

The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.

There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.

The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.

6. Minimalist Architecture Business Plan Template by Venngage

The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .

There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.

7. Small Business Administration Free Business Plan Template

The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.

There are five sections in the two SBA’s free business plan templates.

• Executive Summary
• Company Description
• Service Line
• Marketing and Sales

8. The $100 Startup's One-Page Business Plan

The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.

There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.

9. PandaDoc’s Free Business Plan Template

The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.

There are 11 sections in PandaDoc’s free business plan template.

• Executive summary
• Business description
• Products and services
• Operations plan
• Management organization
• Financial plan
• Conclusion / Call to action
• Confidentiality statement

You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)

PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.

10. Invoiceberry Templates for Word, Open Office, Excel, or PPT

InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.

Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.

Alternatives to the Traditional Business Plan

A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.

Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.

Business Model Canvas (BMC)

The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.

The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.

Segments of the Business Model Canvas

The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.

• Key Partners: Who will be occupying important executive positions in your business? What do they bring to the table? Will there be a third party involved with the company?
• Key Activities: What important activities will production entail? What activities will be carried out to ensure the smooth running of the company?
• The Product’s Value Propositions: What does your product do? How will it be different from other products?
• Customer Segments: What demography of consumers are you targeting? What are the habits of these consumers? Who are the MVPs of your target consumers?
• Customer Relationships: How will the team support and work with its customer base? How do you intend to build and maintain trust with the customer?
• Key Resources: What type of personnel and tools will be needed? What size of the budget will they need access to?
• Channels: How do you plan to create awareness of your products? How do you intend to transport your product to the customer?
• Cost Structure: What is the estimated cost of production? How much will distribution cost?
• Revenue Streams: For what value are customers willing to pay? How do they prefer to pay for the product? Are there any external revenues attached apart from the main source? How do the revenue streams contribute to the overall revenue?

Lean Canvas

The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.

Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:

• Problem: Simple and straightforward number of problems you have identified, ideally three.
• Solution: The solutions to each problem.
• Unfair Advantage: Something you possess that can't be easily bought or replicated.
• Key Metrics: Important numbers that will tell how your business is doing.

Startup Pitch Deck

While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.

Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.

Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.

Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.

Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.

• Cover/Introduction Slide: Here, you should include your company's name and mission statement. Your mission statement should be a very catchy tagline. Also, include personal information and contact details to provide an easy link for potential investors.
• Problem Slide: This slide requires you to create a connection with the audience or the investor that you are pitching. For example in their pitch, Airbnb summarized the most important problems it would solve in three brief points – pricing of hotels, disconnection from city culture, and connection problems for local bookings.
• Solution Slide: This slide includes your core value proposition. List simple and direct solutions to the problems you have mentioned
• Customer Analysis: Here you will provide information on the customers you will be offering your service to. The identity of your customers plays an important part in fundraising as well as the long-run viability of the business.
• Market Validation: Use competitive analysis to show numbers that prove the presence of a market for your product, industry behavior in the present and the long run, as well as the percentage of the market you aim to attract. It shows that you understand your competitors and customers and convinces investors of the opportunities presented in the market.
• Business Model: Your business model is the hook of your presentation. It may vary in complexity but it should generally include a pricing system informed by your market analysis. The goal of the slide is to confirm your business model is easy to implement.
• Marketing Strategy: This slide should summarize a few customer acquisition methods that you plan to use to grow the business.
• Competitive Advantage: What this slide will do is provide information on what will set you apart and make you a more attractive option to customers. It could be the possession of technology that is not widely known in the market.
• Team Slide: Here you will give a brief description of your team. Include your key management personnel here and their specific roles in the company. Include their educational background, job history, and skillsets. Also, talk about their accomplishments in their careers so far to build investors' confidence in members of your team.
• Traction Slide: This validates the company’s business model by showing growth through early sales and support. The slide aims to reduce any lingering fears in potential investors by showing realistic periodic milestones and profit margins. It can include current sales, growth, valuable customers, pre-orders, or data from surveys outlining current consumer interest.
• Funding Slide: This slide is popularly referred to as ‘the ask'. Here you will include important details like how much is needed to get your business off the ground and how the funding will be spent to help the company reach its goals.
• Appendix Slides: Your pitch deck appendix should always be included alongside a standard pitch presentation. It consists of additional slides you could not show in the pitch deck but you need to complement your presentation.

It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.

Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.

Advantages of the Business Model Canvas, Lean Canvas, and Startup Pitch Deck over the Traditional Business Plan

• Time-Saving: Writing a detailed traditional business plan could take weeks or months. On the other hand, all three alternatives can be done in a few days or even one night of brainstorming if you have a comprehensive understanding of your business.
• Easier to Understand: Since the information presented is almost entirely factual, it puts focus on what is most important in running the business. They cut away the excess pages of fillers in a traditional business plan and allow investors to see what is driving the business and what is getting in the way.
• Easy to Update: Businesses typically present their business plans to many potential investors before they secure funding. What this means is that you may regularly have to amend your presentation to update statistics or adjust to audience-specific needs. For a traditional business plan, this could mean rewriting a whole section of your plan. For the three alternatives, updating is much easier because they are not voluminous.
• Guide for a More In-depth Business Plan: All three alternatives have the added benefit of being able to double as a sketch of your business plan if the need to create one arises in the future.

Business Plan FAQ

Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time.  They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.

Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans.  A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.

A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs.  Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.

The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.

A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.

Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.

Exlore Further

• 12 Key Elements of a Business Plan (Top Components Explained)
• 13 Sources of Business Finance For Companies & Sole Traders
• 5 Common Types of Business Structures (+ Pros & Cons)
• How to Buy a Business in 8 Steps (+ Due Diligence Checklist)

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Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

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Primary research: everything you need to know.

19 min read If you want to produce high-quality research, you need to understand what primary research is and how it can benefit your business. Find out how you can use primary research and its various methods to acquire the data you need and create valuable, insightful reports that aid you and your audience.

Market research has quickly become the star player for brands and businesses around the globe, netting them the insights they need, right when they need them.

From understanding industry challenges and future trends to customer satisfaction and product performance, market research is paving the way for organizations and empowering them to create content, products, services, and offers that truly resonate.

And it all starts with one thing: primary research. A research methodology that enables researchers to uncover and answer specific questions about issues, challenges, trends, or otherwise.

In this guide, we’re going to cover everything you need to know about primary research and how you can use it to benefit your business.

What is primary research?

Put simply, primary research is any type of research you collect yourself or commission on your behalf. This could be anything from surveys and interviews to observations and ethnographic research (studying participants in their real-life environment).

Most researchers will use primary research to supplement data from secondary sources, such as journals, magazines, website articles, and books. By using primary research methods alongside secondary research , researchers can validate and support their findings with additional, new data.

You don’t have to be an expert to conduct primary research or collect data from it — chances are you’ve done some of it already. Think back to when you may have been asked to carry out a project at school. If you did the research (or asked mom or dad), e.g. interviewing experts, and using data from journals, you’ve collected and used both primary and secondary data .

That example might be a little simplistic, but the concept still applies. There are, of course, plenty of methods to choose from, so understanding what they are and how they work will help you execute research campaigns.

Now, when you conduct primary research, you typically gather two basic types of information:

• Exploratory.  This research is general and open-ended . It typically involves lengthy interviews with individuals or a specific group.
• Specific . This research is more precise and problem-oriented. It involves structured, formal interviews.

Then there’s the question of qualitative research and quantitative research ; what kind of data do you want to capture? Do you want to understand the emotions and behaviors behind people’s actions or to put precise figures against certain issues? Another thing to consider.

In the next section, we’re going to go through the types of primary research methods, the advantages of primary research, and then how you can do it for your brand or business .

What are the types of primary research methods?

There are lots of different ways to carry out primary research, more notable methods are interviews and surveys — but what about observations, analyses, and focus groups ?

We’re all familiar with interviews. This research method usually involves one-on-one or small group sessions, conducted over the phone or in a face-to-face environment. Interviews are great for collecting large amounts of data from a small sample of subjects, or when specific information needs to be extracted from experts.

For example, for a piece on developing more sustainable energy sources, a journalist would choose to interview a subject matter expert to extract the primary research they need. Not only is the information more authoritative and accurate, but it’s also more compelling.

Be aware though, direct interaction can alter people’s opinions. For interviews and focus groups, it’s best to get an expert to manage and read the room to avoid skewing results.

Another industry staple. Though much more rigid compared to interviews (with predefined questions and themes), surveys are a great way to reach a target market and collect relevant data at scale. Surveys will typically provide a limited amount of information from a large group of people (as there are only so many questions you can ask before respondents get bored).

To get the most value out of surveys, it’s worth defining your audience and questions well in advance. Try to think of key themes that you want to explore and what you want to get out of the data collected.

For example, a supermarket might send out a survey to their customers on customer satisfactio n, asking questions about the overall in-store experience, the online experience, what customers would like to see, and more. Because it’s issued at scale, the supermarket can get a good understanding of what their larger customer base thinks.

Worried about your questions? Here’s how you can write great ones .

Transform your research and gain deeper insight with best-practice surveys

If you want to run world-class research or need help with research questions, look no further than Qualtrics CoreXM .

Designed to eliminate historic research inefficiencies, CoreXM is a single platform designed to get you breakthrough insights faster and more cost-effectively.

It empowers market researchers to centralize insights, leverage advanced analytics and automation to improve research quality, and scale effectiveness with a flexible management model (Research Services).

We can even help you to produce survey templates for free, no matter the type of research. Just check out our library.

Observations

While it might be the most arduous form of field research, observation is arguably the most impartial as there’s no interaction between the researcher and the subject. As such, this approach removes or reduces bias that could be encountered during an interview or survey, as the subject’s actions are not influenced by other factors.

For instance, a sports car manufacturer might want to see how their vehicles are used in real-world scenarios and if there are any limitations on the customer. This could be a case of visiting a race track or car showroom to see how customers use the vehicles.

Focus groups

This method is great for gathering data on particular topic areas. Sitting between interviews and surveys, focus groups allow you to engage a small group of people, e.g. subject matter experts.

More informal than interviews but more professional than surveys, they’re a great way to gain insight and valuable information on customers, pain points, and other areas of interest in your industry.

For example, a technology manufacturer might put together a focus group to discuss technology adoption amongst 24-36-year-olds ahead of a new product launch . Through this focus group, they can learn more about how 24-36-year-olds purchase and engage with new tech solutions .

Research services

While the process of gathering data is relatively straightforward, making sense of it (and having the right skills to turn it into insight) can be tough.

This is precisely why so many brands and businesses turn to research services. According to our data, 97% of market research is outsourced. This allows brands and businesses to gain access to relevant information for truly original research.

Though a more modern form (and approach) to primary research, research services enable brands and businesses to collect data and analyze it very quickly. But the main benefit? Expertise.

With research services you get a team of experts who know exactly what research questions to ask and how to turn survey responses into actionable insight. They know how to get the right respondents and the ideal sample sizes, as well as leverage primary research and secondary research data to build comprehensive, revealing reports.

At Qualtrics, we have a team of experts who can streamline your research process for both primary and secondary research, helping to uncover insights in days, not weeks. L.

What are the advantages of primary research?

Now you know about the main ways to collect data, what are the benefits of these primary research methods?

First and foremost, and perhaps most importantly, primary research delivers accurate, relevant, and up-to-date information, enabling you to identify emerging trends in customer behavior , discover unmet needs, and close gaps across the experience journey . There’s real value in being able to identify what comes next — and only primary research can give you a real-time view of what your prospects and customers need as the world changes around them.

Also, as you have full control of the approach, data collection and analysis, it can be far more efficient and cost-effective than others.

Lastly, the information belongs to you or your organization. You may choose to release the information to enhance your position in your market or industry or keep it private to avoid giving competitors an advantage .

Create better experiences

From a customer perspective, it offers many advantages and provides detailed information on how you can improve products, services, and experiences. By taking their market surveys in-house and using the Qualtrics XM Platform™ , Samsung collects, analyzes, and acts on insights gathered at every touchpoint. The team at Samsung can get studies up and running in an hour and quickly implement findings to transform their product, service, and customer experiences.

Develop engaging content

From a content perspective, this kind of first-hand data offers a plethora of opportunities. You can begin to create trend reports, answer the most pertinent prospect and customer questions, highlight key issues, and much more. Every voice matters and ensuring your research is inclusive is vital.

What are the disadvantages of primary research?

Costs can potentially spiral out of control if you feel that your results are inconclusive or that you want to change the data gathering method.

It can also be time-consuming, especially if you require a large sample size or don’t have the in-house expertise for the analysis. Data gathering is one thing — drawing insights and formulating conclusions is another. The time required to effectively plan, carry out, and scrutinize the data is often greater than the time it takes to conduct secondary research.

Lastly, accuracy. You have to account for potential bias — skewing the results — and poorly worded questions . There are ways to eliminate bias from your surveys, such as:

• including more open-ended questions
• making respondents feel comfortable
• using both qualitative and quantitative techniques
• using an impartial way to gather data

Primary vs secondary market research

The key difference between them is that you collect primary research first hand (often for a specific purpose, e.g. a trends report), while secondary research comes from pre-existing studies, materials, websites, or articles.

Secondary research methods are more about desk research. You scour reputable journals, articles, websites, and studies to find the information you need to either support a point or build your project around.

Most market research will start with secondary research to understand what the issues are or what prospects and customers are searching for online. This could be using Google Analytics to identify the key issues and trends in 2021 and then using primary research to get more information and delve deeper into them.

We would urge you to look at the primary vs secondary research debate a different way: both can be used in conjunction to support and validate points. Incorporating high-quality secondary research data into your reports can provide wider perspectives and show readers that your thoughts don’t exist in a vacuum.

Find out more about the differences between primary and secondary research.

How can businesses use primary research?

Competitor analysis . Trend reporting . Customer satisfaction. There’s no limit to the uses of primary research for businesses, particularly now as it becomes more difficult to gather information from prospects and customers.

One of the most effective ways to use primary research is for industry analysis and content campaigns. Let’s say you produce a report on current trends in automotive. From the data, you find that the key concerns for automotive manufacturers are:

• The skills gap and need for new technologies to support production
• Sustainability and shifting operations rapidly
• Supply chain efficiency and utilizing a dual supply chain (local and global)
• Customer demand and expectations of new-age vehicles

Now not only do these concerns make for great headlines, but you can also build entire campaigns around the data you find. Suddenly, rather than just one report sharing information and not making real use of the insight, you can create blogs, ebooks, webinars, opinion articles, commentary, and much more.

Primary research is the gift that keeps on giving — and that’s precisely why more and more organizations are creating annual reports on the state of their industry or market.

As well as providing unique insight and content campaign opportunities, primary research establishes credibility… and very quickly. If you produce an annual report and none of your competitors are doing the same (or their reports lack the granularity and focus your prospects and customers require), you demonstrate expertise and become the go-to for real insight.

How can primary research support marketing?

As the gift that keeps on giving, primary research lays a foundation for marketing campaigns and long-term strategy.

Most research is top-of-the-funnel (TOFU) — or at least designed to be as such. Market research reports are inherently about raising awareness of an issue or problem — that’s where businesses can extract the most value.

For your marketing team, the issues raised in the report can become the headlines for blogs and commentary. They can then create content to help readers solve those issues, referencing what your business does in the process (but only if it’s relevant). Finally, marketing can steer readers of the report content towards other assets of interest, gradually nurturing readers to a point that they’re sales-ready.

Here are just a few things you can get out of primary research reports:

• Opinion articles
• Sales collateral
• Infographics
• Executive summary reports per industry

Conducting primary research

Getting started with primary research is simple thanks to the tools and software available today, and most of the time it starts with a simple online survey.

No matter what research you want to conduct, there are survey solutions and templates to meet your needs.

But before we go into the technicalities, let’s focus on the fundamentals of conducting research:

• Have a subject in mind. What issues do you want to cover?
• Validate that subject based on secondary research. What are people searching for or need answers to?
• Draft a research question (or problem statement) and revise as necessary. What will be your main question or the purpose of the study?
• Agree on the goals and objectives of the project. What do you hope to achieve?
• Create a timeline and set deadlines. Is everyone aligned?
• Choose your research methods and tools (e.g. face-to-face interviews or online surveys). What’s the best way to get the information you need?
• Work out your ideal sample size (smaller or larger population?). If you need help working out your ideal sample size, check out our calculator!
• Think qualitative or quantitative (a mixture of both generally works well). Do you want to know the reason behind responses or just get conclusive numerical data?
• Develop a questionnaire and have it peer-reviewed. Are your questions as good as they can be and do they support your problem statement?
• Test your questionnaire. What better way to ensure that it works and delivers the right insight?
• Select a delivery method. How do you want to distribute your questionnaire? Online? Offline?
• Analyze the results. Do you have the right tools, skills, and resources to glean insights from the data you receive?

This is certainly a condensed structure for conducting primary research, but it should work nonetheless. The main thing is starting the right way — have the right subject in mind and validate it.

Recent research trumps everything else

When you have the means to conduct research frequently and at scale, the more recent or ‘fresh’ it is, the more valuable the insights.

Of course, not every brand or business is in a position to undertake primary or even secondary market research every year. This could be due to budgetary constraints, poor insights from previous research, or a lack of in-house expertise.

But regardless of the issue, the power of primary research is well-documented and apparent, and it gives you the means to create profound and compelling content for your target audience.

Start your next research project the right way

If any of the above issues sound familiar, we can help. At Qualtrics, we specialize in market research and gleaning insights from data to create breakthrough experiences. From designing your study and finding respondents, to fielding it and reporting the results — we can help you every step of the way.

As well as that, we know how you can get more ROI from your market research and have put together a simple guide to show you.  

In this guide, discover how you can:

• Improve ROI through speed, agility, and consolidation of your research functions
• Get insights faster without sacrificing data quality
• Adjust how you conduct research to be more nimble

Download your copy for free using the button below.

Free eBook: Maximize ROI from your market research with our guide

Related resources

Market intelligence 10 min read, marketing insights 11 min read, ethnographic research 11 min read, qualitative vs quantitative research 13 min read, qualitative research questions 11 min read, qualitative research design 12 min read, primary vs secondary research 14 min read, request demo.

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Purdue Online Writing Lab Purdue OWL® College of Liberal Arts

What is Primary Research and How do I get Started?

Welcome to the Purdue OWL

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Primary research is any type of research that you collect yourself. Examples include surveys, interviews, observations, and ethnographic research. A good researcher knows how to use both primary and secondary sources in their writing and to integrate them in a cohesive fashion.

Conducting primary research is a useful skill to acquire as it can greatly supplement your research in secondary sources, such as journals, magazines, or books. You can also use it as the focus of your writing project. Primary research is an excellent skill to learn as it can be useful in a variety of settings including business, personal, and academic.

But I’m not an expert!

With some careful planning, primary research can be done by anyone, even students new to writing at the university level. The information provided on this page will help you get started.

What types of projects or activities benefit from primary research?

When you are working on a local problem that may not have been addressed before and little research is there to back it up.

When you are working on writing about a specific group of people or a specific person.

When you are working on a topic that is relatively new or original and few publications exist on the subject.

You can also use primary research to confirm or dispute national results with local trends.

What types of primary research can be done?

Many types of primary research exist. This guide is designed to provide you with an overview of primary research that is often done in writing classes.

Interviews: Interviews are one-on-one or small group question and answer sessions. Interviews will provide a lot of information from a small number of people and are useful when you want to get an expert or knowledgeable opinion on a subject.

Surveys: Surveys are a form of questioning that is more rigid than interviews and that involve larger groups of people. Surveys will provide a limited amount of information from a large group of people and are useful when you want to learn what a larger population thinks.

Observations: Observations involve taking organized notes about occurrences in the world. Observations provide you insight about specific people, events, or locales and are useful when you want to learn more about an event without the biased viewpoint of an interview.

Analysis: Analysis involves collecting data and organizing it in some fashion based on criteria you develop. They are useful when you want to find some trend or pattern. A type of analysis would be to record commercials on three major television networks and analyze gender roles.

Where do I start?

Consider the following questions when beginning to think about conducting primary research:

• What do I want to discover?
• How do I plan on discovering it? (This is called your research methods or methodology)
• Who am I going to talk to/observe/survey? (These people are called your subjects or participants)
• How am I going to be able to gain access to these groups or individuals?
• What are my biases about this topic?
• How can I make sure my biases are not reflected in my research methods?
• What do I expect to discover?

• Search Search Please fill out this field.

What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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