
Why do I need to conduct research?
Record numbers are starting their own business. Last year, according to the Centre for Entrepreneurs, 772,002 new businesses were started in the UK, which is a 13.25% increase on 2019’s total.
Success is not a given, of course. It is believed that about a fifth of all new businesses fail in their first year, with most running out of cash, leaving them unable to cover their costs and continue to trade. About a third of all new businesses fail within two years, with only 30% lasting 10 years.
In many cases, some or better research before starting the business may have prevented many first-year business fatalities. Conducting sound research in the right areas can enable you to make better choices, so you to get off to a better start and make it past your first year and beyond.
So, if you’re starting your own business, what should research in advance and what information do you need to find out?
Researching opportunities and trends
Finding out specific, up-to-date information about your market can enable you to better understand the available opportunity – as well as the outlook for future sales. Basic desktop research can reveal the value of sales in your market in recent years and whether it’s increasing or diminishing. You also need to find out what external factors are affecting the market and how (toggle through the carousel below to see some examples of this).
Finding out statistical data is called “quantitative research” and it can really help you when starting up and you’re wondering what to sell.
- How many customers are there within your market?
- What products or services sell best and have any new ones been launched recently?
- Which products or services don’t sell as well as previously?
Although a vast amount of information is freely available online, some buy specific market data to save time. It might be worth contacting your trade association to see if it has carried out any recent market research. Visit the Trade Association Forum to find your trade association.
Free tools such as Google Keyword Planner and Google Trends can also help you gather insights into what people are searching on Google.
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Covid-19
The impact of the Covid-19 pandemic has been far-reaching. As well as the economic fallout, it has accelerated a change in behaviour for many businesses and consumers alike. The mass adoption of remote work and the huge increase in e-commerce sales are two pertinent examples of this change. Are these trends likely to impact on your business model?
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Brexit
The UK’s exit from the EU is a seismic moment that will dramatically alter the UK economy. Some see Brexit opportunities for British businesses to trade globally, whilst others view the EU-UK trade deal and introduction of customs paperwork as a major hindrance.
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Climate crisis
As governments across the world work together to tackle the climate crisis, there are various measures being implemented to reduce global climate emissions. Any new business will need to factor in how they’re going to accommodate these ethical and policy considerations.
Conducting competitor research
This is essential and once again, simple, no-cost online research can reveal much valuable information. In the case of retail, you could pose as a customer and visit a competitor’s premises to find out more. Also visit competitor websites.
You need to know who you’re up against, how long they’ve been going, where they are, how they market themselves and sell, and on what terms. Crucially, of course, you need to research their prices, so you can work out whether you can afford to compete or even beat their prices.
Here are some questions you’ll need to consider…
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Are there many competitors in your market?
Your competitors are likely to come in various shapes and sizes. Understand who are your immediate competitors but also consider indirect ones too. For example, supermarkets and large e-commerce businesses (Amazon) are able to sell a multitude of products and services. And remember, even if you think you’ve found a gap in the market for your product or service, that doesn’t mean an existing business can’t enter the market at some point.
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How do their prices compare to yours?
Pricing will always be a key differentiator between competing businesses and a determining factor for customers. If you are going to charge more than your competitors, you’ll need to ensure you’re able to justify this and convey why in your messaging.
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Do they provide other things, such as discounts or introductory offers to sweeten the appeal of their products or services?
There are plenty of ways to entice customers to buy from you and there’s no harm in borrowing these tactics from your competitors. Ideally, you’ll borrow and improve on them.
Researching different suppliers
Also take enough time to research potential suppliers.
- Who and where are they, what products and services do they offer and – how much do they charge?
- Will they give you credit?
- Can you get discounts?
- How do they maximise their value to their customers?
- What do their customers think of them?
These are all key questions. Finding suppliers that offer you best value and consistently good customer service can make a huge difference – it’s not just about finding the cheapest prices.
What about tax?
You may or may not need to pay for an accountant’s services all year round, but their expert advice about tax matters could save you a lot of money. They can tell you the most tax-efficient way to register your business and what expenses you can claim for. They can help you with VAT if necessary and administer your PAYE scheme if you need staff. They can advise you on accounting software, managing your finances and cash flow, which is to key to your survival and success.
Accountants (and independent financial advisers) can also advise you about your personal finances and pension. Also research accountants before starting your business. Seek recommendations from other small businesses, so you find an accountant with the experience and service-level you need.
What about launch and operating costs?
You may or may not need to sort out commercial premises and pay rent or business rates. You could need to buy a vehicle, equipment, tools, stock or materials, or sort out insurance, staff uniforms or packaging. You need to create your brand, organise your website and possibly get stationery printed.
Although minimising your outgoings by only buying things you need is a must, starting a business inevitably involves cost. Carefully consider everything you need to buy to launch your business and keep it running until it becomes profitable. Accurately work out how much you’ll need to spend – these are your start-up costs.
Also work out how much money you’ll need to run your business week to week – including your earnings. These are your operating costs, which will tell you how much you need to sell each week or month to stay afloat.
Startup costs calculator
We've put together some of the typical things you'll need to invest in when starting a business. Fill in the business startup costs below to find out how much money you'll need to get up and running.

Calculating your result
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Is my business viable?
Obviously you’ll need to recoup your start-up costs, too, but comparing your monthly operating costs against your likely monthly revenue (your market research should allow you to forecast sales) will enable you to see whether your business idea is viable.
If your outgoings (costs) are higher than your revenue (sales or earnings), your business idea is a non-starter. You need to cut your costs or increase your revenue (make more sales). If you can’t do either, starting your business will only end in failure.
Alternatively, informed by your research, a basic calculation could suggest (on paper at least) that your sales are likely to be higher than your costs, so, you can start your business with a measure of confidence. And another benefit to all of the research you’ve done is that you now have much of the information that you need to create your start-up business plan.
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