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Wondering if market research is important for your small scale business? Stuck between choosing qualitative, quantitative or statistical sampling methods? You have stumbled upon the correct blog to answer all your questions.

People dealing in small business have to manage a lot of day-to-day operations. Thus making time for market research is difficult, especially when you have to learn about the whole process of market research. But it becomes necessary to keep a check on the audience periodically; otherwise, revenue could be lost. For a business venture to be successful, accurate information is required. Information about the existing customer base and the competition prevailing around the industry, in general, is an important aspect. It helps the business owners to determine the feasibility of the business before they make any commitments relating to substantial resources being used in the venture.

Effective market research helps to get inside the customer’s head. What kind of marketing research is to be used depends upon the availability of budget. It is tricky to find out which kind of market research would be suitable for the available time and cost investment.

What is Market Research?

Market research is an important tool to assist in business planning. It is the process of collecting information which provides an insight into the customer’s way of thinking, buying patterns and location. Market research helps to monitor the market trends and keep an open eye towards what your competition is doing.

It is the process by which information about the market is gathered, analyzed and interpreted. It helps in solving the marketing challenges that a business is most likely to encounter. The process of market segmentation and product differentiation is impossible to be conducted without a properly developed market research strategy.

Types of Data in Market Research

Primary information

Primary research helps in gathering two types of basic information which are either explanatory or specific. Explanatory research is an open ended research. It helps to define a specific problem and involves detailed and unstructured interviews in which lengthy answers are asked for from a small group of respondents. Whereas specific research is precise in scope and is used to solve a problem that exploratory research has identified. Comparatively, specific research is more expensive than exploratory research. Primary research is targeted to the group by using resources such as direct mail, telephone and personal interviews.

Secondary information

This type of research uses information gathered by government agencies, trade associations, labour unions, media sources, industry associations and chambers of commerce. This information is usually printed on pamphlets, newsletters, magazines and trade publications.

Advantages of Conducting Market Research

• Helps in identifying potential new customers
• Learn more about the existing customers
• Have a better understanding of the competition
• Test new markets
• Identify new opportunities regarding performance, pricing and promotion
• Communicate their decisions regarding existing and new products or services

Why is Market Research Important for Small Businesses?

Helps in spotting business opportunities

Once the market research has been conducted, it becomes crystal clear as to which section of the society the business wants to target and what kind of goods or service they are reaching out for. Sometimes approaching other small businesses becomes mutually beneficial when the joint promotion is carried out. Knowing about the other products and services which the customers can buy helps in coming up with additions to the existing one.

Business risk is reduced

According to the Bureau of Labor Statistics, half of the businesses around the world don’t make it past the fifth year. Thus, to ensure that the business survives longer in the market, proper research about the customers and sales has to be done, which can be done only through market research. Regular market research needs to be conducted so that they can keep a check on the current and the upcoming potential customers.

Decision making becomes easier

Market research becomes an important part when tough business decisions are being made. The market research report can be used while making decisions. Decisions – such as where to spend advertising and marketing budget, opening a storefront in a new location, the price to be charged, and which products are to be discontinued – can be made with market research.

Create relevant promotional materials

Proper promotional materials need to be designed so that it would attract the eyes of the customers. To choose what type of text and images to add on the fliers, website, and social media accounts, thorough market research needs to be done to know exactly how to proceed. Since target customers have been identified and their needs properly recorded, it will become easier to know what to address and how to address when the marketing materials are being created.

Outsell competitors

A business which knows its customers more tends to capture the market. They can easily beat their competitors by fulfilling the demands of the customers in a better way and standing out in the market. To outsell competitors, market research can be used to target the dissatisfied customers and fulfil their unsatisfied needs.

Set better goals for the business

When targets are set out for the business, they are based upon the sales and customers. Without carrying out market research, it would become difficult to determine whether the goal is achievable or not. With the help of market research, it becomes simpler to determine the directions which the company has to follow to reach its goal.

Know where to advertise

Small business owners have budget constraints. Hence, it becomes very important for them to decide where to spend to optimise the maximum returns. Market research can help in identifying the intended audience and on which platform they would likely to see the passage being advertised.

Marketing research is an important task for a small business to be successful. It is very easy to begin with by gathering information about two things – the target customer and the competitors. One doesn’t have to get all the information at one go. The sentiments of the target customers keep changing over time. Thus, market research is an ongoing process that must keep a record of these. But a business must not forget about the proper execution while doing the research.

Successful entrepreneurs use market research to keep up with trends, make better business decisions and maintain their company’s competitive edge. Regardless of whether you’re starting or expanding your business, research is vital to understanding your target markets and increasing sales.

Here are some specific areas where market research can help you build a stronger business.

1. Improve your branding

Many companies don’t have a good handle on their brand. They ask themselves: How do customers perceive us? How does our brand stack up against our competition?

You can use market research to improve your branding by exploring such subject as:

• Brand awareness—Are customers aware and familiar with your brand?
• Competitive comparisons—How do customers view your company compared to the competition?
• Personification—What characteristics and traits do customers associate with your brand?

You can also survey customers to gather feedback on marketing content such as logos, brochures, websites, etc. Brand research is typically conducted by interviewing customers or organizing focus groups. In this way, you can explore different topics in-depth and get feedback from the participants. The results will help you develop brand positioning and improve your marketing assets.

2. Understand your customers better

Sometimes entrepreneurs need better information on the size of their market, their target customers and how best to reach them. We recently completed a study for a client who had developed a new kitchen product and wanted insights on her target market. Here are some of thing we wanted to find out about typical customers for this new product.

• How old are they?
• Are they male or female?
• What is their marital status?
• Do they have children?
• Where do they live?
• What is their level of education?
• What kind of social media do they use?

We designed a questionnaire to be answered online by 1,000 consumers across Canada. This type of consumer study helps us to understand the profile of the target audience so that we can develop focused brand positioning. By focusing your efforts on the right target market, you can see faster results, improved efficiency and greater overall performance from your marketing campaigns.

3. Measure the effectiveness of your marketing

Lots of entrepreneurs want to do a better job promoting their companies and generating sales. Market research can help by providing information on the effectiveness of your marketing efforts. We can design studies to gather feedback from customers on the look and feel of your marketing messages. We can also measure customer awareness and reaction to specific marketing campaigns and activities.

Gathering this type of data can really help maximize your marketing budget by helping you design marketing that reaches and resonates with your audience.

4. Identify new opportunities

Market research can help you identify new market opportunities that might be available to your company. It can help identify geographic regions for expansion and/or test the market’s readiness for your new products or services.

For example, you could be looking to open a new retail store and need to find the right location. Or you may be planning to change your distribution channel and need to determine how the decision will affect your customer base.

To answer these questions, we could analyze existing data from government publications, Statistics Canada data and/or industry specific reports. These sources provide insights in such areas as:

• Market size
• Demographics
• Market share statistics
• Industry dynamics
• Major industry suppliers
• Key competitors
• General industry data such as number of firms and their geographic distribution

Obtaining this type of market data is a necessary first step to help firmly “size up a new market” to determine the optimal business strategy and operations.

5. Get insights into product features

If you’ve come up with a new product or are improving an existing one, you will want to know whether you have the right features and packaging. Research will provide insights your company can use to refine your products before you commit to expensive production costs.

When we design new product research, we gather consumer feedback on a concept and/or a prototype. We also collect data on consumer reaction to the product and its features, including its look, design, usability, colours, packaging and other variables.

We might also ask how consumers would shop for this product to gather insights for a distribution plan. We can also ask for reactions to the marketing messages, creative content and promotional ideas that are planned for the product launch.

Typically, we’d start with qualitative research (interviews or focus groups) because this conversational format allows us to gather rich, in-depth feedback from consumers. If possible, we would provide a prototype or sample of the product for customers to touch and use.

After that, we would validate the research insights with comprehensive survey with a similar audience but a larger sample set (i.e. more than 100 consumers). By doing this, we will have rich data to make informed decisions on finalizing the product concept and/or design.

Market research is an essential tool for businesses of any size or industry to understand their target audience, identify customer needs and preferences, and gather information about their competitors. In a nutshell, market research helps businesses grow and succeed. This is a primary goal for small businesses, making market research integral to small businesses making data-driven decisions that will help them to grow and succeed in their industry.

According to the U.S. Bureau of Labor Statistics (BLS), almost 45% of new businesses fail during the first five years, and the biggest reasons for this are almost obvious: poor market fit, lack of funds, competition, lousy location, drastic market changes, and many others. Most of these challenges can be stymied by understanding customer needs and the market environment – which is what market research does.

Market research may look like an unnecessary step  that costs some money, time and effort yet looks dispensible for smaller businesses.  However, it is a basic step that may determine the business’s life. Conducting market research can be expensive and time-consuming, but not having proper data can lead to even costlier mistakes and a lack of understanding in the market, so it is critical to be able to invest in market research.

And market research doesn’t have to be complicated or expensive. In this article, we look at simple steps to conducting market research for small businesses and the important data that they can collect.

Steps to conducting market research

One of the first steps in conducting market research is to define the research objectives. This will help the business to focus on the specific information that they need to gather. The research objectives should be specific, measurable, achievable, relevant, and time-bound (SMART), and once the objectives have been defined, the business can choose the appropriate research methods to collect the data.

There are two main types of market research methods: primary and secondary research. Primary research is conducted by the business itself and can include surveys, interviews, and focus groups. This method allows the business to collect firsthand information from its target audience and gather their opinions and feedback. Secondary research, on the other hand, is conducted by using existing sources such as published reports and studies, government statistics, and industry publications.

After the data has been collected, it should be analyzed and interpreted to extract valuable insights. This can be done through statistical analysis, customer segmentation, and competitive analysis among other methods. Once the insights have been identified, they can inform critical business decisions such as product development, pricing strategy, and marketing efforts.

Types of market research data that small businesses can collect

There are several types of market research data that small businesses can collect in order better to understand their customers, target market, and industry. Some common types of market research data that small businesses should consider collecting include:

• Demographic data: Information about the age, gender, income, education, and occupation of their customers and target market. This type of data can help a small business understand the needs and preferences of their target market and tailor their products or services accordingly.
• Behavioral data: Information about how customers use a small business’s products or services, as well as their opinions and attitudes towards the business. This type of data can help a small business understand customer satisfaction and identify areas for improvement.
• Competitive data: Information about the products, services, and marketing strategies of a small business’s competitors. This type of data can help a small business understand its competitive landscape and identify opportunities for differentiation.
• Sales data: Information about the sales of a small business’s products or services, including information about the number of customers, revenue, and profit. This type of data can help a small business understand its financial performance and identify areas for growth.
• Social and Online data: With the help of different tools one can collect data from various social media platforms, reviews websites, ratings, searches, and other online data, which can be helpful in understanding how customers view the business, how they find the business, and how they engage with the business.
• Surveys: One of the most potent tools of market research, surveys are a way to gather direct feedback from the customers, which can be used to improve products or services, customer satisfaction, and understanding of the target market.

The Bottomline

In conclusion, market research is a valuable tool that small businesses can use to gather important information about their target audience, competitors, and industry. By conducting market research, small businesses can make data-driven decisions that will help them to grow and succeed in their industry.

Market research is the process of gathering and analyzing information about customer groups, competitors, your industry and the general business environment. Whether a company is small or large, market research plays a vital role in decisions about what products or services to offer and how to sell them. A small business owner must make gathering market information an ongoing process and a high priority. He then can be more confident in the decisions he makes, knowing they were based on solid data rather than guesswork or hunches.

Assessing the Feasibility of a Venture

Before an entrepreneur launches a new venture, it is essential that he can state with confidence that the marketplace truly needs what he plans to offer — his products or services — and that there are enough potential customers to support the business and allow it to be profitable. Market research at the pre-launch stage involves the business owner talking to as many different experienced businesspeople as he can about his venture and soliciting their opinions about its feasibility. He also gathers statistics such as demographic data and predictions about the future growth of his proposed target markets. He talks to prospective customers as well. This information is critical in helping him decide whether to take the risk of launching the company.

Setting Strategic Direction

To grow his company, a small business owner may decide to offer new products and services, may expand the geographic scope of his marketing efforts and may change the marketing message he delivers to his market or the media he uses. The decisions whether to implement any of these changes are supported by market research. For example, if he wishes to begin selling his products internationally, he must have information on the number of potential customers and how many entrenched local companies he will have to compete against.

A simple definition of market research

Market research is the process of gathering and analysing data about one or more of the following:

• A specific industry – For example, trends and patterns affecting the industry as a whole.
• A product market – Research concerning the performance of a specific market. This research may look into things like the forecasted growth of the market and the number of competitors active in the market.
• Products or services – Research involving a specific product or service. This kind of research may involve estimating demand for a new product, or determining if sales would be improved by changing the appearance, branding or the cost of a product.
• Customers – Research that seeks to understand the behaviour of past, present and future customers.

The market research process can reveal information about product branding, product differentiation, pricing strategies, marketing campaigns and much more. It can be useful for established businesses who are looking to improve their sales, or for new businesses seeking to understand if their business model is viable.

Small-to-medium enterprises, freelancers, consultants and entrepreneurs can also gain a significant advantage by using market research strategies and services.

How can market research help a small business?

Some of the many ways market research can help your business include:

Finding out who your potential customers are

The more insight your business can gain into potential customers, the more easily you can craft your product or service to suit their requirements. Information including the potential customer’s gender, age, buying habits, intended use of the product or service, and level of education can all be very useful.

Your business can use the valuable information gained from the market research process to fine tune the marketing strategy of your product or service. It can also help test the feasibility of a new product or service before bringing it to market — potentially saving you thousands of pounds.

Obtaining more information about your current customers

Market research into your current customers can help your business improve sales figures, customer satisfaction and brand loyalty.  Some of the valuable information that market research strategies and services can provide include:

• Learning which aspects of your product or service customers like or dislike.
• Discovering how much customers would be willing to pay for your product or service.
• Understanding why customers choose your business instead of your competitors.
• Learning if customers believe your business offers good value for money.
• Understanding which things influence customer’s buying decisions.

This information can help you refine your products or services in ways that will make them more attractive to your target market.

Determining how effective a marketing campaign will be

The information you gather during the market research process will help you develop effective, evidence based marketing strategies.  You will understand how a price change may affect demand in the market, what kind of advertising appeals to potential customers, which media channels are the most effective, and much more.

The ability to make informed decisions and create effective marketing strategies can save your business thousands of pounds.  You won’t be taking a “stab in the dark” when creating a new advertising campaign or product line — you will know precisely what will work, and what won’t.  Market research can also help you make informed decisions about other business activities, including when to expand, consolidate or diversify the business.

Defining appropriate production goals for your business

The information gathered by the market research process can be used to accurately predict sales for your business. You will also understand how well new products or services will be received, allowing you to properly prepare for their introduction.

Identifying obstacles that your business may face in the future

Market research strategies and services will help you identify any problems that exist — perhaps the product or service is priced poorly or the market is simply crowded with competitors. The information obtained will help you understand if your business should cut its losses or improve the product or service you are offering.

Develop your business

Increasing the size of your small business can be a daunting task, because unnecessary over-expansion can cause a business to collapse. Market research allows you to determine if an expansion of your business is the correct path to take, giving you the assurance that you need to invest wisely. It can help you develop new products or services, make changes to distribution channels, increase/decrease output and much more. Market research gives your business some certainty about the decisions being made.

Monitoring the activities of your competitors

Market research allows you to keep a close eye on the performance of your competitors and answers important questions like — Why do customers prefer a particular competitor? Are competitors selling more product than me? What do customers think of the competitor’s branding and marketing? This information can help you devise business strategies that keep you ahead of the game.

Research new products and services

Businesses can use market research to predict how successful a new product or service will be in the market. For example, you can determine if the branding and price of a product or service is appropriate before launch.

Discover new opportunities in the market

Having a deep understanding of prevailing market conditions helps a business to take advantage of new opportunities. Market research can help you identify if a market is under serviced and helps you to take advantage of that fact. It can also help you spot changes in the overall market like population increases, shifting demographics and other important trends.

Performing research doesn’t need to be difficult; however, it does need to be complete and inclusive of specific information.

1 – Create Buyer Personas

Learning how your customers make their buying decisions is important; however, it’s essential that you know who they are. Knowing who your buyer personas are is just the beginning during your research of the primary market.

Buyer personas are fictional representations of your perfect customer. Personas help you develop your strategy, streamline your communications, and visualize your ideal audience.

Some key characteristics that you should focus on including in your business persona are:

• Gender
• Age
• Job titles
• Family size
• Income

Basically, the idea is to help you use your persona as a guide when you experience real life customers. For all you know, your business may end up having multiple personas and that’s perfectly fine! Just be certain that you’re being thoughtful about the persona you’re planning to optimize. It’ll make things easier when you’re planning campaigns and content.

2 – Identify Market Segments

Now that you’ve learned about buyer personas, it’s time for you to find a sample of your ideal customers. Doing this is going to help you understand the customer’s buying habits, challenges, and characteristics.

Your customers should be people who recently bought something or who have decided not to make a purchase.

Here are some ways you can meet with them:

• Create an online survey
• Conduct phone interviews
• In-person through the means of a social group

An important factor to keep in mind when choosing who you wish to engage with is starting with characteristics that apply to your personas. Not to mention, it will help you conduct your marketing research.

3 – Increase Engagement

A lot of research firms in marketing have groups of people that they can pull from whenever they need to perform a study. The fact of the matter is a lot of individual marketers are unable to afford that kind of luxury. However, that’s not exactly a terrible thing. All the time you’re going to spend recruiting people for the study may lead to having better participants.

Below is a brief recruiting guide to make things a little easier:

• Bring up a list of people who have made a recent purchase
• Have a list of those who made an active evaluation of your product, but haven’t made a purchase
• Ask for participants via social media
• Try to leverage your network
• Make sure you have an incentive

4 – Ask Questions

One of the best ways to get everything out of your conversations is to prepare your questions in advance. Try creating a discussion guide for everything such as a social group, surveys, online and phone interviews. This will ensure that frequently asked questions are covered and you can use the extra time wisely.

It’s worth mentioning that this should not be a script. All your discussions are better when they’re conversational and natural.

5 – Know Your Competition

Figuring out your potential competitors starts off your research of the secondary market. With that said, there’s a lot more than just one company against the other. In some cases, a fraction of a company may compete with another company’s service or products, despite the fact that this company puts more effort in a different area.

Even if you think you know your target audience, conducting market research can be an eye-opening experience. Consumers of today are more powerful than ever. They know what they want and usually aren’t willing to settle for less. And why should they? With so many options out there, the world is their oyster.

When you’re starting your business, you need to have a deep understanding of your customers. In fact, knowing your customers inside and out is probably the most important key to success.

Your customers are the people who desperately need your product or service. You need to know who they are, why they want your solution, what they like and dislike, and even what they had for breakfast. Knowing all of this will help you find more customers and build a better product that your customers will clamor to buy and tell their friends and colleagues about.

This is where market research comes in.

What is market research?

Market research is the process of gaining information about your target market—a fancy way of saying “getting to know your customers.” Ideally, you find specific information about your target market and the key factors that influence their buying decisions. This is a key step in your larger market analysis. For more information on that check out this article.

As you get started, you’ll need to determine what type of market research is going to work best for you. Make that decision based on the value of the insights you think you’ll gain, versus the time and effort you need to invest to find the information.

Market research is often confused with an elaborate process conducted by fancy consultants that takes a tremendous amount of time and money. That’s certainly not true. You can, and should, do most of your own market research, and it doesn’t even have to be that hard.

After I explain the different types of market research, I’ll share all the resources you can use to do your own.

Types of market research explained

1. Primary market research

Primary market research is research that you conduct yourself, rather than information that you find that’s already published. You gather this information by talking directly with your potential customers. This can either be exploratory research, where you ask open-ended questions, or specific research, where you try to obtain quantifiable results.

Here are a few methods you can use to conduct primary research.

Conduct focus groups

A focus group requires you to gather a small group of people together for a discussion with an assigned leader.

Survey your customers

Distribute these both to existing customers and potential customers. Sending out a survey using tools like SurveyMonkey is a great way to collect this type of information from current or potential customers of your business. You can even run tiny surveys right on your website with services like Qualaroo. Make sure to ask specific questions—but try not to lead people toward the answer you want to hear. Be as objective as you can.

Assess your competition

Look at your competition’s solutions, technologies, and what niche they occupy. This can help you better understand their position in the market and how you can compete. Complete a competitive matrix or SWOT Analysis to streamline your competitive analysis.

Hold one-on-one interviews

Find potential customers and talk with them about their problems and your solutions to those problems. Ideally, conduct these in-depth interviews in your customer’s workplace, or wherever they will be when they might consider shopping for your solution. You can also just ask to conduct these interviews remotely.

2. Secondary market research

Market research may also come from secondary sources. This is information others have already acquired and published about customers in your industry.

Access to this secondary market research data may be yours for the asking, and cost you only an email, letter, or phone call. Much of it is entirely free and easily available online. Here are a few ways to gather secondary market research.

Trade associations

Trade associations are organizations that serve specific industries. There’s almost certainly one for your industry. Once you find it, contact them and ask them for information about their industry and markets in the industry.

Government information

The U.S. government has a treasure trove of information to wade through. The data is all free but may take a little bit of time to find.

Third-party research sites

For reasonable fees, there are market research companies that will sell you pre-written industry reports that provide information on industries and their target markets.

Best market research resources

There’s so much information out there that it can be difficult to know where to start with your market research. Here are our favorite resources for doing market research.

U.S. government resources

If your business is operating within or expanding to the United States, these are the top sites you should use for your research.

1. U.S. Census: This is a great starting point for data about the U.S. population. You can drill into the data and find out nearly anything you want to know about different locations and demographics.
2. Census Business Builder: Beyond population data, you can look at how much people in your industry spend.
3. Bureau of Labor Statistics: A fantastic site for information on specific industries, like 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.
4. Consumer Expenditure Survey: If you want to know what people spend their money on, this is your go-to source.
5. CensusViewer: While it’s not a U.S. government resource, this free tool leverages US Census data and other data sources to give you access to data in an easy-to-use format that you can explore both visually on a map or in data reports for cities, counties, and entire states.
6. Economic Indicators: Offers free economic, demographic, and financial information.
7. Pew Research Center:  A nonpartisan fact tank that was founded with the mission of informing the public about the issues, attitudes, and trends shaping the world. They conduct public opinion polling, demographic research, content analysis, and other data-driven social science research.

Industry summaries

If you’re looking for information about specific industries, these are some of the best options to look into.

1. 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.
2. Hoovers Industry Research: While not a free resource, the industry summary data provided here can be helpful if you need in-depth industry reports.
3. IBISWorld: Regularly updated industry reports, that provide insight regarding the current status, market outlook, and competitive landscape of a given industry. It is a subscription service, but you can download free reports to test it out.

Business location market research tools

Interested in learning more about the demographics and customer base in a given geographic location? Check out these resources.

1. ZoomProspector: This tool can help you find the ideal location for your business, or find new locations similar to where you already are for expansion and growth.
2. MyBestSegments: This tool from Nielsen is a great resource for finding out what demographic and psychographic groups live in a given zip code or where the highest concentration of a given segment lives. While the most detailed data is not free, you can get a lot of great insights from the free version.
3. SizeUp: This is a useful mapping tool to help determine where your target customers are. It’s very useful to help you determine the ideal location for your business.

Survey tools

If you plan on conducting primary research, here are some of the surveying tools you should look into.

1. SurveyMonkey: Should you need to poll a group for business purposes, SurveyMonkey is free and reliable. Simply build the survey and send it out to your audience.
2. Google Consumer Surveys: You don’t need to have a contact list to send out a survey on this site. With Google Surveys, you can target users from around the web and get instant feedback on your business idea.
3. TypeForm: Whether you need a simple form or a survey, TypeForm does it beautifully. It’s especially good on mobile.
4. Qualaroo: If you run a website and want to get quick feedback from the people that are already showing up there, Qualaroo is a great tool for this purpose.

Trade and industry associations

Many industries are blessed with an active trade association that serves as a vital source of industry-specific information. Such associations regularly publish directories for their members, and the better ones publish statistical information that tracks industry sales, profits, ratios, economic trends, and other valuable data.

1. Wikipedia’s list of U.S. trade groups: This is a fairly comprehensive list to kickstart your research.
2. Directory of Associations: Another long list of associations. You should be able to find an association for your industry here.

Market trends

1. Google Trends: Use Google Trends to discover what people are searching on and how search volume on important topics is changing over time.
2. Statista: If you’re looking for statistics and trends, Statista is a great place to get started. You’ll find data on virtually everything here.

Leverage market research to inform your business decisions

Doing market research is a powerful way to reduce the risk for your small business or startup. The more you know about your customers and your industry, the less likely you are to waste money on marketing and advertising campaigns that don’t reach the right people.

You probably already have a gut feeling about who your customers are and what their needs and pain points are. But taking the time to validate (or invalidate) your assumptions can make a big difference to your company’s bottom line and long-term viability.

Running a successful business takes passion, dedication, and strategy. The passion and dedication can only come from within you. The strategy, however, can be learned. With that in mind, here are five tips for running a successful business.

Start with the why

Every successful business has a reason for being in business. That’s “the why”. In other words, it’s the reason why people should care about your business. Defining the why can help you answer many other key questions about your business.

For example, if you know how you’re going to improve someone’s life, you know who your potential customers are likely to be. This in turn gives you a reasonable idea of the size and value of the potential market.

Set appropriate goals

Your goals are essentially your definition of business success. There are various approaches you can take to defining them. In the context of business success, however, the SMART system is probably the most appropriate. These initial goals are just to get you started. As you start getting close to achieving them, you’ll set yourself new ones.

Create a written plan

Your why is your starting point and your goals are your first milestones. Your business plan sets out the path you believe will take you from your starting point to those milestones. Write down your plan in as much detail as you can, then conduct a thorough SWOT analysis on it. Ideally, ask someone you trust for an independent second opinion.

If you identify weaknesses and threats in your plan, then try to address them before you even start your business. If you can’t, then start addressing them as soon as you possibly can afterward.

In particular, make it a priority to deal with anything which may limit your ability to make and receive payments. For example, if you’re setting yourself up as a limited company, apply for a business bank account as soon as your incorporation is confirmed. Likewise, if you’re planning on using a payment processor get your account(s) set up as quickly as you can. You’ll probably have to go through some kind of verification process before you can actively use the account(s), and you may need time to familiarize yourself with the system.

Keep reassessing your plan

As you work on your plan, keep asking yourself three key questions.

1. Do I still believe in my why?

2. Do I still believe in my goals?

3. Do I still believe that I’m on the right path to sustainable business success?

If the answers to any of these questions are “no” then you need to make at least one change. Realistically, this one change will probably lead to others. In a worst-case scenario, you may decide that your business venture cannot succeed.

If this happens then recognize the difference between business failure and personal failure. Take the lessons you’ve learned, be grateful for them, and move on. Remember that many successful entrepreneurs have at least one failed business behind them. Some have several. They persevered and, in the end, they achieved business success.

That said, if your initial business plan was solid, you’ll likely just make adaptations to it as you go. Follow the same process of writing them down and performing a thorough SWOT analysis on your new plan.

Delegate as much as you can

Traditionally, new entrepreneurs have had to put in a lot of hours to grow their businesses. There is still a lot of truth in this. Fortunately, however, there are many more opportunities for strategic delegation. If you have no money to spare at all, then look for free/freemium tools that can help you automate straightforward but time-consuming tasks.

Using these can help you to grow your business more quickly. You can then use the income from your business to invest in paid-for tools and, ultimately, professional services such as accountants, PEOs, and legal support.

A growing number of Americans are starting home-based businesses. According to the Small Business Administration, 52 percent of all businesses are home-based, and that number has steadily increased in recent years.

Keith Evans, a Florida-based entrepreneur, is part of that statistic, although he jumped on the home-business bandwagon back in 1995.

Evans runs After-Hours Executive, a consulting firm that offers help to new startups during evening and weekend hours.

Evans says he saw a lot of potential in running a home-based business. From saving money on office space to eliminating commute time, he thought his idea for a consulting firm would take off from his home. He was right. With two employees and about a dozen clients, the former telecommunications worker stays busy.

“With fewer expenses I can keep my rates low and can worry less about keeping the business afloat during leaner months,” he says.

Through strategic business planning, Evans plans to bring on more consultants this year and “aggressively grow” his business in 2014.

While his success stems from two decades of experience, Evan says there are several tips he’d like to pass on to others who may want to follow in his home-based business footsteps.

1. Use free or low-cost services to save on monthly expenses

Of course, having a home office means you don’t have to shell out big bucks for office space, but Evans says that isn’t the only place where a home-based business owner can save some money.

“I could probably write volumes about the free and low-cost resources an entrepreneur can use,” Evans jokes.

For example, Evans uses Google Voice for a business phone line. He uses FreshBooks, a cloud-based software, for his accounting needs and uses Wave Accounting to create professional invoices.

2. Outsource jobs to free up your time

Most home businesses start out as a one-person shop, but you don’t have to be a jack-of-all-trades. You can always outsource jobs, Evans says. Sites like oDesk and PeoplePerHour can hook you up with affordable independent contractors. On these sites, you post your project and contractors bid on it. You select the contractor that has the skills you’re looking for and fits within your budget.

“Finding freelancers frees you up to focus on more important tasks,” Evans says. “However, if you have some free time during the lean months, save money and keep your own skills sharp by doing the work yourself.”

3. Join professional groups

One of the downsides to running a home-based business is limited social interaction, so Evans suggests joining professional groups in the area.

“Even the smallest towns have networking groups, and joining them is a way to get out of the house, away from the computer, and in position to enjoy the company of like-minded people,” he says. “Plus, going to these events helps you spread the word about your product or service.”

4. Don’t skimp on marketing

Marketing is a bit challenging for home-based businesses, so it’s important to cough up a few bucks to introduce your product or service to new customers, Evans says.

“As much as every dollar counts, marketing is one area where you need to spend money to make money,” he says. “A quality marketing campaign can have huge returns, especially when compared to the return you see from free ads on Craigslist.”

Your home-based business will require a significant time investment, Evans says, but the end result can be a successful business.