How to research demand?

[eni9ma]

Dear Expert Entrepreneurs,

I am currently putting together a business plan to provide computer/network security services to local small, and mid size, businesses to help them lower the cost and labor involved in staying secure in todays highly vunerable technology marketplace.

I would really appreciate tools, advice, or resources (paid or free) to help me better identify the potential demand for this type of service.

Some ideas I've had is holding seminar(s) marketed towards this demographic on how to secure their computer networks while demonstrating real world attacks. I have not yet decided weather the seminar would be paid or free. But I think I would be able to sample businesses to feel the response to this interest.

Can anyone help me with this area of weakness?

Greatly, and authentically apprecaited,
Anthony

[chriswick]

http://www.ttmc.co.uk/marketresearch...FSpLMAodEES7AQ

Try that. ^

Chris

[eni9ma]

Thanks chriswick,

We're getting warm, as I'm in the U.S. Minnesota to be exact. The website indicates they provide the service for the UK only.

It's good to learn there arel business out there that focus on providing that research. Thanks.

[akula]

chris, links? you can do better. if you got that kind of a response, you'd flame the poster.

anthony, you research demand by pitching prospects

everything else is an academic exercise as far as startups go (i.e. you're not IBM, secondary market research is irrelevant to you, you're not doing powerpoints to some managerial committee)

you don't need hypothetical figures for projected industry wide demand

you need cash commitments, due monday for exactly what you're selling

there's a distinction between forecasting industry demand and forecasting accessible demand

as opposed to IBM, you need to count what you can access which is done by pitching customers

hitting Forrester for some number on industry demand and plugging a derivative of that figure in your sales forecast is an exercise in wishful thinking and fanciful storytelling

go sell some shit, that's the only way to forecast relevant demand

[eni9ma]

akula,

I appreciate your post, but doesn't what you say defy all expert recommendations of researching demand before launching a startup?

I can see the value of pitching, and attempting to sell but isn't that a dynamic and evolving process after you have identified there is a potential for what you're selling?

I'm not arguing that you know what you're talking about, but I'm talking about a full time real business with bringing a few employees on in the first phase. I ideally want to do that only after due diligence.

This business is going to require a technology infrastructure and office. I'm hesitant to proceed without the research step.

[akula]

ok....I'll give you an extended answer

1) the expert recommendations you are reading are written from corporate planning point of view. In a corporate environment, secondary market research (i.e reports, statistics) plans, figures and forecasts are an essential part of corporate managers allocating budgets to specific project groups

in a corporate environment, it doesn't matter if the forecast is right, as long as there is a forecast, or the budgets don't get allocated

2) In a startup environment, the purpose of forecasting is different. You can't make up some numbers and show them to 3rd party so they can give you a budget.

Your forecasts are about getting prepayments and contracts for delivery from live prospects, so you can use these legal promises of future payment to recruit employees and partners. You can't get trade credit from a web designer because the Yankee group thinks your space will be worth $5.7 billion in 2008

What you need is a contract that says XYZ LLC will buy this stuff from us if you make the website (or something...)

That's the difference in practicalities of corporate and startup demand forecasting. Your forecast horizon should only be as far as the next sale...not the value of network hardware in 2008 in North America, or how much money you're supposed to be making in 5 years time.

3) The discrepancy between my advice and expert advice is because you're not listening to the right experts. You're reading books written by corporate managers. If you go to http://southerncrossventures.com/blogroll and ask for advice from actual entrepreneurs and venture capitalists who are building STARTUP COMPANIES everyday - they'll tell you the same thing as I am telling you.

4) Don't believe me? Go and ask any of these guys on "how do I research demand?" and they'll tell you - "drop everything and go make some sales".

[eni9ma]

akula,

Thanks for extended answer. You obviously know what you're talking about, and a greatly apprecaite you expanding and explaining your advice. I can understand the difference of research forecasts you're referring to.

I just don't want to shot from the hip, or be a total visionary. I want to do everything I can in the fullest degree to help make the venture successful.

So again, I appreciate the time you took.

Anthony

[akula]

akula,

Thanks for extended answer. You obviously know what you're talking about, and a greatly apprecaite you expanding and explaining your advice. I can understand the difference of research forecasts you're referring to.

I just don't want to shot from the hip, or be a total visionary. I want to do everything I can in the fullest degree to help make the venture successful.

So again, I appreciate the time you took.

Anthony

Anthony, I'm glad that you're benefiting from this board.

The best thing you can do to help make the venture successful is to go make some sales, or sign contracts for future delivery and use these contracts to aggregate the resources you need to deliver those sales.

Make the sales, and you'll be happy. Go fishing for validation of your enthusiasm (aka "market research") and you'll be unhappy.

Good luck :-)

P.S. And remember the cognitive bias...most founders are apprehensive when it comes to sales because it takes them outside of their comfort zone (because when you sell - you get rejected - it's a painful job). I'm not saying that this is happening to you - but for your benefit - you should at least entertain the notion that your brain is playing tricks on you by forcing you to engage in low-downside activity (i.e. there's no risk of being rejected if you surf around hand picking data validating that you're a genius for spotting the opportunity).

To solve the problem, you must fight your self to do what's good for your venture rather than your ego :-)

[shelley]

You should discuss this interesting proposal at www.youngceoforum.com whe where young minds meet.

[Sam Barona]

Hmmm,

Anthony, if you are seeking financing then you will need secondary and primary research. Having ready-orders, or even letters of intent, as adviced by Akula will only strengthen your case (tremendously).

The secondary research only gives out an overview of the larger picture, ie. total market value nationally, trends in this market, etc. Ensure that you quote the relevant studies where you found your research in (just like a thesis).

Primary research is often given more weighing because it gives a more localised and relevant picture. You will need to ask potential customers (using a questionnaire type format) what they currently use, how often, how much they spend, why they use it and most important, if they would use yours and why.

For your research to be of statistical value, you will need to have a minimum of 400 responses in your sample. Depending on how much money you're trying to raise, you might also need to get your assumptions and forecasts (which are based on your research findings) audited by a professional firm.

12 years in marketing, launching a plethora of products and raising over US $50M has tought me a few things.

Hope this helps

PS. you can find plenty of resources on drafting your interview correctly, and on the right process for interpreting your findings into reliable statistical terms.

Sam

[Sam Barona]

PPS: its also good practice to adjust your forecasts by -20%. This is very much optional, but should give your financers more trust in your forecasts, since they are used to people hyping up plans.

Many investors tend to look at forecasts in totally unorthodox ways, and whislt some will have your plan reviewed by their accountants, some will just take a look at your projections, then at your assumptions, and if these fit, htey will simpy look at your forecasts again and halve them. Then they make the decision if its a risk they want to take.

Sam

[UpNorthPrince]

ok....I'll give you an extended answer

1) the expert recommendations you are reading are written from corporate planning point of view. In a corporate environment, secondary market research (i.e reports, statistics) plans, figures and forecasts are an essential part of corporate managers allocating budgets to specific project groups

in a corporate environment, it doesn't matter if the forecast is right, as long as there is a forecast, or the budgets don't get allocated

2) In a startup environment, the purpose of forecasting is different. You can't make up some numbers and show them to 3rd party so they can give you a budget.

Your forecasts are about getting prepayments and contracts for delivery from live prospects, so you can use these legal promises of future payment to recruit employees and partners. You can't get trade credit from a web designer because the Yankee group thinks your space will be worth $5.7 billion in 2008

What you need is a contract that says XYZ LLC will buy this stuff from us if you make the website (or something...)

That's the difference in practicalities of corporate and startup demand forecasting. Your forecast horizon should only be as far as the next sale...not the value of network hardware in 2008 in North America, or how much money you're supposed to be making in 5 years time.

3) The discrepancy between my advice and expert advice is because you're not listening to the right experts. You're reading books written by corporate managers. If you go to http://southerncrossventures.com/blogroll and ask for advice from actual entrepreneurs and venture capitalists who are building STARTUP COMPANIES everyday - they'll tell you the same thing as I am telling you.

4) Don't believe me? Go and ask any of these guys on "how do I research demand?" and they'll tell you - "drop everything and go make some sales".

Man I swear this cat types with one hand in the Bible cuz every time he touch his keyboard on a serious level - a touch of God reigns out!! Now this response wasn't for me but once again I learned a lot more from it than what I picked up from these Marketing classes I been attending. Good thing I got the keys to the classroom so tomorrow I'll deliberately leave the keys home and show up 15 minutes late.

[mjohns]

Dear Expert Entrepreneurs,

I am currently putting together a business plan to provide computer/network security services to local small, and mid size, businesses to help them lower the cost and labor involved in staying secure in todays highly vunerable technology marketplace.

I would really appreciate tools, advice, or resources (paid or free) to help me better identify the potential demand for this type of service.

Some ideas I've had is holding seminar(s) marketed towards this demographic on how to secure their computer networks while demonstrating real world attacks. I have not yet decided weather the seminar would be paid or free. But I think I would be able to sample businesses to feel the response to this interest.

Can anyone help me with this area of weakness?

Greatly, and authentically apprecaited,
Anthony

Good old paper and pen...
Prepare a questionaire and go and ask business that fit your target market...
They will appreciate the face-to-face contact more than any thing else!

[Franakapan]

I agree with what akula has been saying - start selling your product/service as soon as possible. You will be able to gauge how much demand their is for your product from this and you can act accordingly.

You might also want to consider writing a 'whitepaper' based upon your first customers repsonse to your product - what went well, what areas did the customer feel needed improving etc. Nt only does this give an excelent source of feedback in order to improve your product, it also gives future potential customers an insight into what your company can provide.

Soz if it sounds rushed, I have to be off to my next lesson

My 2 pence.

[akula]

Man I swear this cat types with one hand in the Bible cuz every time he touch his keyboard on a serious level - a touch of God reigns out!! Now this response wasn't for me but once again I learned a lot more from it than what I picked up from these Marketing classes I been attending. Good thing I got the keys to the classroom so tomorrow I'll deliberately leave the keys home and show up 15 minutes late.

nope, unfortunately no divinity here :-)

what i write is simply the product of training, which is the product of many people's industry experience and empirical research

glad you're benefiting from the board