Market research sounds like something big companies pay agencies for. For a new small business, it's mostly about answering a few plain questions. Who has this problem? How do they solve it today? What do they pay? Who else is selling to them?
You can answer most of that with free tools, a few conversations and some honest note-taking. This guide shows you how, and how to avoid the common trap of collecting opinions that feel encouraging but don't tell you much.
Decide what you need to find out
Research without a question tends to wander. Before you start, write down the three or four things you most need to know. These are usually the assumptions your idea depends on.
For example, say you want to start a mobile bike repair service. Your questions might be: do commuters in my area struggle to get bikes fixed quickly, what do they do now, and what do they pay? Everything you do next should help answer one of those.
Talk to potential customers the right way
Conversations are the most valuable research you can do, and they're free. Aim for 10 to 15 short chats with people who match your target customer. Friends are fine to start with, but try to reach people who don't know you well, because they'll be more honest.
The key is to ask about what people have actually done, not what they might do. "Would you use a service like this?" invites a polite yes. "When did your bike last need fixing, and what did you do?" gets you facts. Past behaviour is a far better guide than hypothetical promises.
Don't pitch your idea during the conversation. Once you describe it, people tend to tell you what they think you want to hear. Listen more than you talk, and write down the exact words people use, since they're useful later in your marketing.
- Tell me about the last time this happened.
- What did you do about it? What did that cost?
- What was the most annoying part?
- Have you looked for a better way? What did you find?
- Who else should I talk to about this?
Check search demand with keyword tools and Google Trends
If people search for something, there's usually demand for it. Google Trends is free and shows whether interest in a search term is rising, falling or seasonal. Set the location to the United Kingdom and compare a few phrases side by side.
Google's own search box helps too. Start typing your topic and look at the autocomplete suggestions and the "People also ask" questions. Free keyword tools, including Google's Keyword Planner with a free Google Ads account, give rough search volumes. Treat the numbers as a guide to whether people care, not a forecast of sales.
Research your competitors
Competitors aren't a bad sign. They usually prove people pay for something similar. Find five to ten businesses your customers might use instead of you, including indirect ones like doing it themselves. Their prices are also a useful reference point when you price your services.
If a competitor is a limited company, the Companies House register is free to search. You can see when it was set up, who the directors are and the accounts it has filed. Small companies often file limited accounts, so don't expect full figures, but it helps you understand who you're up against.
- What do they charge, and how do they package it?
- Who are they clearly aiming at?
- What do their customers praise and complain about?
- How do customers find them?
Use free public data from ONS and Companies House
The Office for National Statistics publishes free data that can help you size a local market. UK Business Counts, available on Nomis, shows how many businesses of each type are in an area. It's drawn from businesses registered for VAT or PAYE, so it misses many smaller sole traders.
For consumer businesses, the ONS custom area profile tool lets you draw an area on a map and see Census 2021 figures for it, such as population, age and types of housing. It covers England and Wales. Companies House advanced search lets you look for companies by name, location and date of incorporation, which is handy for spotting how many similar businesses have started nearby.
Run a simple survey, and handle the data properly
Surveys work best after conversations, when you know what to ask. Keep them short, ask about behaviour rather than opinions, and use a free tool like Google Forms or Microsoft Forms. Remember that a few dozen replies won't be statistically reliable. Use them to spot patterns, not to prove a point.
If you collect names, emails or anything else that identifies someone, UK GDPR applies. Only ask for what you need, tell people why you're collecting it and how you'll use it, keep it secure, and delete it when you're done. The ICO has a free privacy notice generator for small businesses, and a fee checker to see if you need to pay the data protection fee. Genuine research isn't direct marketing, but if you use the survey to promote something or collect contacts to sell to later, the ICO treats it as marketing. This is general information, so check the ICO's guidance for your situation.
What to do with what you find
Put your notes in one place and look for patterns. Which problems came up most? What are people already paying? Which words did they use? Then write a short summary: who the customer is, what they struggle with, what they do now, and where you could do better.
Research should lead to a decision, not more research. That might be narrowing your target customer, adjusting your offer, or running a small paid test. Our guide on how to validate a business idea covers the next step, and a one-page business plan is a good place to record what you've learned. If you'd like help turning interview notes into a plan, Exitnine Coach can work through them with you.
Questions people ask
How many customer conversations do I need?
There's no fixed number, but 10 to 15 good conversations usually reveal the main patterns. If you keep hearing new things, keep going. If you keep hearing the same things, you've probably got enough to act on.
What is the cheapest way to do market research?
Talking to potential customers and reading online reviews and forums cost nothing but time. Google Trends, ONS data and the Companies House register are free too.
Do I need to follow GDPR for a simple survey?
If you collect information that identifies people, such as names or email addresses, yes. Collect only what you need, explain how you'll use it, and keep it secure. An anonymous survey that collects no personal data is simpler.
Is it a bad sign if there are lots of competitors?
Not usually. Competition often shows there's a market. What matters is whether you can serve a particular group of customers better, or more conveniently, than the options they already have.