Understanding your market can be the difference between success and failure of your small business. Market research tools help determine if your business or product idea has an audience you can sell to. Proper market research considers the audience, competition, and consumer needs, and although it can get expensive, many of the tools below are free.
1. U.S. Census
The U.S. Census provides free demographic data about US citizens. In addition to the simple demographic information such as age and sex, the census also provides detailed information about education level, living arrangements, and employment status.
The U.S. Census also provides free tools to organize its information including:
- Building a customer avatar: In addition to age, income, and education, use this tool to discover how Americans move—such as from urban to suburban areas—and if they take steps to prepare for emergencies.
- Economic trends: The Census Bureau tracks economic indicators from construction spending to imports to retail inventory. It publishes reports and tracks trends. You may want to review these trends before investing in a new venture to see if the market can support it.
- Business planning: The census website has heat maps and analysis tools to help you find the best area for your business to locate. Also, use it to research a customer base and find the best venues for advertising.
- COVID-19: The bureau publishes regular reports about the effects of the pandemic on small businesses. Also, research more general data about its impact on the population.
2. Census Business Builder
The Census Bureau offers more than raw facts. You can use the Census Business Builder to compile the data into a report. It’s a great tool to collect data that you can use to test your business idea.
This free and straightforward three-step process has you define your industry, set your location(s), and run a report. The report automatically gathers and displays all the census data for your industry and area with charts and graphics. You can change settings to get the info you want and download it to PDF, Excel, or CSV for further number crunching.
The Census Business Builder data can help you decide on a location for starting or expanding your storefronts. It can also better define your ideal customer. If you plan on buying a mailing list, running a census report can help you determine the areas with the highest concentration of your potential customers.
CensusViewer is a tool that converts census data (like age, family size) into colorful, easy-to-read geographic visuals using Bing maps. Depending on the number of states you need data for, the cost runs from $14.95 to $299 per month. There are discounts for multiple-month subscriptions as well.
To use the tool, select the combination of fields for the information you need, and generate a colorful map with supporting graphs. If you’re comfortable with spreadsheets, export the data to Microsoft Excel for further analysis. You can set what data displays by categories such as state, county, city, census blocks, and voting precincts. It’s an excellent tool for analyzing data or creating slides for a business proposal or marketing report.
4. Bureau of Labor Statistics (BLS)
Need to know the best wages to offer employees? Concerned about finding enough qualified candidates in your area? The Bureau of Labor Statistics provides this data and tools that give you the ability to:
- Determine competitive wages
- View worker demographics in your area
- Get inflation and cost-of-living data
- See unemployment levels
- Get information on how Americans spend their free time (for benefits and paid-time-off research)
- Gain insights into international competition
5. Google Trends
Google Trends is a free tool that lets you evaluate the popularity of topics on the Google search engine. In addition to national searches, you can research trends regionally and by state.
Discover how a topic—such as an issue, item, or question—trends over time, in different regions and languages. Google Trends can also show you related keywords for use in your advertising. The tool gives you the ability to search for recent trends from the previous seven days, or historical data that goes back to 2004.
When using Google Trends, you can look up topics specific to your business and see related searches. These related searches can add context to your overall strategy. For example, if you are considering developing a product, you may want to check the overall interest in that problem. Use Google Trends to determine if the demand is a short-term trend, or here to stay.
SBDCNet is an excellent, free resource for anyone starting a business including small businesses and startups. It offers an online clearinghouse of information and tools for doing market research and creating a business plan.
Here are a few of SBDCNet’s useful tools:
- Business plan templates by industry
- Links to how-to and other articles and checklists
- An interactive map to find your local SBDC where you can get more localized information and help
- Business snapshots that include customer demographics, startup costs, sample business plans, even COVID-19 considerations
- Training and mentorship
ReferenceUSA collects data from hundreds of thousands of public information sources, then analyzes, verifies, and compiles the information into easy-to-use databases. To access ReferenceUSA for free, you will need to go through your local public library, academic institution, or government resource center. Some of the ways you can use it include:
- Competition research: It compiles lists of current, closing, and soon-to-open businesses with contact information.
- Labor information: See the jobs and internships being offered across the US. Use this to get a feel for labor in your area, job descriptions, and more.
- Avatar and product information: The US consumers database gives demographic and lifestyle data to build customer profiles and research the need for a product or service.
8. IBIS World
IBISWorld is a company that provides up-to-date industry analysis reports. Banks around the world use IBISWorld to determine the health of an industry before providing a commercial loan.
You can search for reports by NAICS code in the software to see an industry summary before purchasing. There are often blogs, videos, podcasts, white papers, and webinars about industries that you can view for free.
While IBISWorld provides reputable industry analysis with excellent information, it is not cheap. A single report costs $925—or you can get an online six month membership for $1,095-$1,595. However, if your local SBDC has an IBISWorld subscription, it may be able to provide a complimentary report for no cost. Contact your local SBDC to determine if it has a subscription.
9. BizStats and Bizminer
BizStats offers a wealth of free business statistics about businesses of various sizes, including sole-proprietors and large corporations. The business statistics include industry and market benchmarks, financial information, valuations, and projections.
As a heads up, the information comes from the IRS, and it may contain errors—BizStats does not clean the data. In addition to reports, BizStats offers simple tools like financial ratio calculators, benchmark and ratio tools, glossaries, and IRS explanations of line items.
Bizminer provides pre-made reports on a variety of industries. These reports run over a hundred dollars each, or you can get licenses for multiple reports. You need a license if you wish to share a report with a customer. A typical report includes:
- Industry peer group by market segment, area, sales class, time
- Financial metrics including cash flow, profitability, efficiency, debt-risk
- Your classification according to the North American Industry Classification System (NAICS)
- Customizable display options
Both Bizstats and Bizminer are indispensable when creating financial projections for a business plan. Often, you can use Bizminer to see how a typical startup business in your industry performs financially and base your projections off its numbers. Banks and investors will rely most heavily on your financial projections for their funding decision.
Not sure where to start your business? ZoomProspector helps you choose the best location for your business by using current commercial real estate, demographic, population, income, and labor data. It’s free to use because it’s sponsored by state and regional economic development agencies around the US. Still, ZoomProspector does charge for more in-depth information and prepared reports.
From the homepage, you can search communities by 13 categories such as city name and educational degrees. After this search, you will be able drill down to get graphically displayed information on several demographics. If you order a subscription, you can register your profile, get infographics from nearly 1,300 data points, and create customized content. You can test the subscription with a 30-day free trial.
11. Survey Monkey
You may want to use a survey to collect firsthand data and gather information on a product, service, brand change, or customer need. SurveyMonkey is one of the top online survey services. The tool allows you to survey your own email lists. Its free version allows up to 10 questions on a survey with a collection of up to 40 responses per survey.
If you’d like to send a survey out to a broader, unknown audience, you can purchase the SurveyMonkey Audience. Starting at $1 per response, SurveyMonkey Audience allows you to define your audience, create your survey questions, and send it out to its worldwide pool of survey-takers.
Here are a few tips to consider when creating a survey:
- Stay focused on the target audience and goal
- Keep questions short and simple
- With each question, try to focus on one topic
- Use response scales when possible, but use “yes” or “no” when you need definite answers
- Test out your survey on a few people to test the completion rate before sending it out to a broader audience
Once your audience begins to submit survey responses, SurveyMonkey Audience will provide real-time results and analysis tools that include custom reporting, filters, and cross-tabbing to drill down on the data.
12. Trade Associations
Trade associations, both local and national, are great resources to use to find data about your business’s industry. Typically, these associations provide high-quality statistics relevant to your industry.
A great tool to discover trade associations in your industry is the Directory of Associations. While many associations publish industry statistics for free, you may need to pay a membership fee to access the data.
For more general local industry information, you may want to look to your local Chamber of Commerce. The Chamber may collect information about the local demographic and your potential customers. Additionally, the local Chamber is a great place to network with other local small business owners.
13. Facebook Groups
Facebook offers over 10 million group pages where enthusiasts gather to share their excitement about everything from anime to business software. Before you join a Facebook group, make sure to follow its rules, especially in regards to self-promotion. Breaking any group rules could get you booted from the group page.
Here is some of the market data you can get from Facebook Groups:
- Ideal customer research: Look at the members’ list and read profiles to get an idea of your target audience. Group pages organize members by admins, your Facebook friends, and people who share common interests. Start by reviewing people whose interests touch upon your products or services. Review their demographics and posts to get an idea of who they are and what excites them.
- Competitor research: The member’s section also divides out company pages that are in the group. This can give you an idea of your online competition. Check their profiles to see what they offer, where you coincide, and how you can stand out. Look at their branding for ideas.
- Influencers: Look for active group members who post often and have a lot of followers. You can see their follower amount by looking at their profile. Do they talk about products or issues that you address with your product or services? If so, note or follow them.
- Pain points: Check the discussion feed for questions to determine specific things that excite the group or are problems. How can your product address that? The Popular Topics section lets you narrow down the thread.
- Ask questions: Groups are about community, so jump in, make comments, and ask questions. There’s a poll feature you can use as well. Before posting any polls, take time to build relationships within the group or ask the admin for permission before posting.
If you have your own Facebook group, you can use Facebook Insights (analytics) for demographic data. Use Insights to learn which topics that you post get the most reaction. With your own group, you’re also more at liberty to ask specific questions and have the ability to contact influencers directly.
No Time? Outsource It
If the idea of market research intimidates you, or you prefer to put your time and expertise elsewhere, you can hire a freelancer. These folks have the qualifications and experience to do this research for you and prepare market reports. Before hiring, factor qualifications into the price.
For example, Upwork has a wide range of market researchers that charge anywhere from $10 to $125 per hour. Some freelancers offer prepackaged deals, such as a market and customer research report, for $400. Freelancers list their qualifications, areas of expertise, and experience, which you can filter to narrow your search.
The market research tools above will help you understand your potential customers better. With tools like the U.S. Census, Google Trends, and SBDCNet, much of the research you can do is free. Other tools, such as IBIS World and BizMiner, may be offered for free through local government resources like the SBDC. Use the information you gather to form a marketing strategy, or add it to your business plan.