Exploring the Cost of Paid Market Research Options

As a statistic, the outlook for businesses to succeed beyond 10 years can be alarming. As time goes on, the failure rate for startups gradually increases and on average looks like this: 21.5% of startups fail in the first year, 30% in the second year, 50% in the fifth year, and 70% in their 10th year. In 2019, the long-term failure rate of startups remained around 90%.

When you begin to dig into these figures and talk to small business owners, it becomes apparent that one of the main contributors is being blindsided by issues that could have been prevented with Market Research. Of the main reasons Investopedia cites for why businesses fail, two of them are directly tied to market research. They include targeting the wrong market and not doing enough research.

The Advantages of Hiring Market Research Experts

With startup failure rates as high as they are, and two of the main reasons businesses fail being tied to a lack of, or inadequate, market research, the value of doing it properly becomes apparent. Yet, unfortunately, many individuals are at a loss for how to get started or what methods to deploy. This is why the savviest of entrepreneurs tend to hire experts to perform this critical task.

One of the first obstacles is knowing how to set up your primary research methods to reach the right audience and gather the right information. Primary market research means going right to the source: your potential customers. Common primary research methods include interviews, surveys, focus groups, and observations.

Experts are also adept at secondary research, which includes accessing and analyzing existing market research information and data. This is often difficult for individuals as they don’t know where to go, are unable to access information due to hefty subscription fees, or don’t know how to properly analyze the information once obtained.

Not only are market research experts able to identify and gather the most relevant information to get to the heart of your business, they have access to the most trusted secondary data sources (like IBISWorld and Statista), and most importantly know how to analyze the information to gather meaningful insights. They also have the expertise, capacity, and resources to do it faster than doing it yourself.

Experts, like Joorney Business Plans, know how to adequately classify your target market(s) and how to identify the most important questions that need to be addressed for each unique business and what market research methodologies are best suited to answer them.

How Much Does It Cost to Hire Someone to Conduct Market Research?

Once the value of paying someone to do your market research becomes apparent, the next logical consideration is whether or not you can afford it or how much you should budget. How much market research will cost can vary widely based on a number of factors including:

• Your business goals (aka: what questions you need answered)

• Type of business (Industry, B2C vs. B2B, local/niche vs. global)

• How much base information you already have

• What level of insight you need

• How quickly you need the information

Generally speaking, pricing will be based on what type of report you expect and the depth of information required. According to one of the most comprehensive sources of market research information on the web, marketresearch.com, average costs for most common types of reports are as follows:

• Top level reports– $100 – $1,000 – Typically includes an overview of the broad industry, top players, and basic insights.

• Full-market reports– $1,500 – $8,000 – This is a more in-depth report that gives a full review of the industry, market, and subcategories, including their current state and future projections. It will also include current trends and technologies, and predictions about what way the market will move in the short-term and long-term.

• Product detail market reports– $15,000-$35,000 – This type of report is a deep dive into testing/researching a specific product/service. The cost is high as it often uses several specifically-tailored, custom methods of testing your target audience(s) to determine things like product market fit, product satisfaction, and overall perception of your product in the marketplace.

Hiring the Right Market Research Expert: Firms vs. Consultants vs. Universities

You have three primary options for hiring outside experts – firms, consultants, and universities.

Firms tend to fall within the average price ranges mentioned above more closely than the other types of experts. As an example, Joorney’s Premium Research starts at $3,000. A common output of our service is most closely aligned with what is described as a full-market report. However, all market research services are fully tailored to the unique needs of our clients. In general, firms usually provide a great value as you are getting the combined expertise of multiple professionals and research experts. They also tend to be more responsive as they have set business hours and administrative staff and they are able to offer quick turnaround times due to capacity.

Individual market research consultants are another option. Due to the broad nature of individual consultants, their prices tend to vary more widely. Prices are typically based on the individuals’ level of experience and several other factors. While there are many great consultants out there, it can be overwhelming to select one. The ease of creating a good website and trendy marketing solutions can also make it very difficult to identify one that will actually deliver the results you expect.

The option that people tend to think about least is universities. This can be a good solution particularly if your budget is constrained as they often charge a fraction of firms or consultants charge. Many business schools offer Market Research services as a way to draw in real-life clients to provide their students with practical experience. While this can be a good solution, be prepared for a longer timeline as programs may only accept a certain number of clients and timetables often align with curriculum. The quality of the reports also tends to vary as it is prepared by students.

Financial Modeling: An Important Key to Business Plan Success

A strong argument could be made that the financials are the most important part of a Business Plan. The only way to develop these financials in a sound fashion is through the process of financial modeling. Financial Modeling is one of the most important tools you have in creating a successful business plan.

How Financial Modeling Works

Financial modeling is a way of creating an “abstract representation of real-world financial situations”, particularly as they apply to business. They are working representations, usually created in a program like Excel, that allow you to input various scenarios to see their potential financial outcomes. This representation helps guide businesses to making informed, well-considered decisions even in complex situations.

Financial Modeling in the Business Plan’s Financial Projections

Financial modeling is used in a business plan to create Financial Projections. Unlike financial modeling, which is meant to be a “living” document that will have multiple outputs based on different variables, financial projections are static figures that do not change. These financial projections are in essence the goals of the business. Existing, future projections may be overwritten by new projections later but, the original projections themselves will not change, rather will be replaced by more recent, and often more informed, projections.

Break-Even Analysis: Financial Modeling Example

When it comes to creating your business plan, financial modeling will play a role in all of your financial projections in one way or another. Let’s take the break-even analysis as an example. A break-even analysis shows when a business will become profitable. It is based on how much you will charge for your products or services, your sales volumes, and the expenses you expect to incur.

You may have an idea of your sales volumes and revenue or the expenses you will incur, but it’s only when you begin to put it on paper, via financial modeling, that you can start making real decisions about your business. It will help you decide what expenses to take on and where you may need to cut. It will also help you set your sales goals. Financial Modeling allows you to start putting in your planned expenses as you do research. It lets you adjust all the numbers as you go, do research, and make decisions.

As an example, after research and listing your expenses, your total expenses for three years come to $100,000. However, your sales expectations are only $80,000, which would lead to a $20,000 deficit. If you want to break even in the first three years, you have a couple options for the business plan at this point:

1. Reasonably increase sales expectations, either in volume or revenue

2. Find ways to decrease some of the expenses

3. Completely cut some of the expenses

Financial modeling in the business plan financials allow you to see an issue in abstract, on paper, well before it occurs. It allows you to better plan and support your financials to get a clear picture. Your financial projections will rarely fall together without research and evaluating various scenarios. It will almost always require financial modeling to make important decisions about the business to set realistic, reasonable financial projections from the beginning, so you have the most sound, stable, and realistic Business Plan possible.

A Business Plan vs. an Information Memorandum: More Similarities than Differences

Information memorandums are documents used in mergers and acquisitions to present information about the business. Although they are not the same as a business plan, they share a lot of similarities. As business plans are typically more common and therefor better understood, it is easier to understand an Information Memorandum when comparing it to a business plan.

Goal

The similarities begin with the goal of the information memorandum and the business plan. The goal of the information memorandum is simple. It is to interest buyers so that the business can be sold for the best price possible. The goal of business plan is not as straightforward. A Business Plan can be used strictly as an internal road map.

However, in most cases, whether it is used to apply for bank loan, recruit investors, or bring on additional founders, business plans are about “selling” the business. Not in the literal sense as with the information memorandum but, in the sense that you are convincing others the business is a good venture and will be successful.

Components

Business plans and information memorandums are so similar that many of the main components of the documents will be the same.

1. Executive Summary – In both the business plan and the information memorandum, the executive summary will be the first section and is a very brief overview and introduction to the entire document.

2. Company Overview – Regardless which document you are preparing, you need to give an overview of the business. This may differ slightly in a business plan if the business in not yet established. However, for a business plan for an established business and an information memorandum, this is where you will share history including topline financials, current client base, and other vital information on what the business does and how it does it.

3. Products/Services – At the core of any business is the product and/or services it offers. These need to be explained for a potential buyer in an information memorandum or for potential investors, loan officers, or other interested parties in a business plan for them to truly understand the business.

4. Company & Employee Structure – This usually focuses just on management but, can encompass all staff depending on the size of the business. Although the audience of a business plan won’t typically have a say in restructuring the business, in an acquisition or merger they almost certainly will, which is why this information is so important in the Information Memorandum.

5. Market Overview – The market overview is another component that will be found in both an information memorandum and a business plan. In both instances, this is based on extensive Market Research which will be required for both types of documents. You can never truly understand a business if you don’t understand the overall market in which they operate.

6. Financials – This is another core component of any business presentations whether that is a business plan or an information memorandum. Historical figures will be presented along with supported future projections.

It is easy to see that a Business Plan and an information memorandum actually have more in common than differences. At the end of the day, both documents are about presenting the key, vital information about a business to an outside party in the best light possible.

Connecting Financial Modeling to the Pitch Deck

 

Whether you realize it or not, financial modeling is closely tied to a pitch deck. When you create a pitch deck, the last thing on your mind is probably Financial Modeling. Yet, it plays a very important underlying role in the pitch deck’s creation. Financial modeling may even be used to facilitate a conversation with a potential investor following a pitch deck presentation.

Financial Modeling Defined

The first step to understanding how financial modeling ties in with the pitch deck is to fully understand financial models. Unlike Financial Projections, which are static and do not change once set, financial models are dynamic, adaptable tools used to evaluate multiple scenarios. Financial modeling is a key component of decision making in everyday business as well as initial business planning.

The Role of Financial Modeling in Financial Projections

Financial modeling will be used to determine the final financial projections which will become part of the business plan. The Pitch Deck, of course, is a presentation of the overall business plan. One of the main components of the pitch deck will be the financials. As expected, this is one of the main interests of potential investors.

When determining the financial projections, they are not as concrete as many people realize. They are based on a number of assumptions. These assumptions must be supported but are open to interpretation and can usually be within a wide range. Pair that information with the number of variables and it’s easy to see how there could be thousands of possible outcomes. It is all about how you put the numbers together.

When you set out to create a business plan and ultimately a pitch deck, you are doing it because you believe the business can be profitable. Financial modeling allows you to prove that to yourself and see under what circumstances it can happen. It also allows you to understand the potential, both the lower and upper limits, of your potential expenses and revenues.

The process of financial modeling makes it possible to either confirm your decisions or, to make more informed decisions about your business plan. You may, for instance, decide to change the location of your office or decide to be fully remote. It allows you to eventually understand exactly how much money you need to launch or grow. It will also allow you to see where you can cut expenses or where you may need to focus your sales efforts or ramp up your sales goals.

Facilitating Investment Conversations

Ultimately, the Pitch Deck will hopefully lead to investor interest in your business. Often, potential investors will run numbers themselves after the meeting to determine their investment and potential return under various scenarios. However, if you can anticipate these questions, you can prepare financial models that you can use in real time to facilitate a preliminary conversation. This can help speed things along and demonstrate you are prepared, thorough, and taking your business seriously.

Financial Modeling may seem removed from the pitch deck but, as you can see, it actually plays a very imperative role. It forms the foundation of your financial projections, facilitates you making important business decisions, allows you to support and defend these projections and decisions and can even help you facilitate the investment conversation.

4 Reasons to Have Professional Business Plan Writers Prepare Your Information Memorandum

If you are an investment banker or M&A advisory firm, and especially if you are an individual, you may want to consider hiring Professional Business Plan Writers to create your information memorandum, also knowns as the confidential Information Memorandum (CIM). There is a great deal of benefit to involving these professionals in the process.

Efficiency

In most cases, a third party will negotiate the sale of a business. If you are one of these third parties, taking time to produce the information memorandum could very likely create a bottleneck in your business. In instances like this, it is often best to outsource some portion of the work required to other professionals in order to efficiently prepare a business for sale while still running your own business.

Although you will likely dictate what is featured and highlighted in the information memorandum, your time is likely better spent focused on recruiting new clients and negotiating sales prices instead of writing up the official documents. Even if you are an individual, hiring Professional Business Plan Writers may be the best way to proceed for a number of additional reasons.

Sales-Minded

Professional business plan writers write business plans for a wide range of purposes. However, the most common reason is to secure outside funding from lenders or potential investors. When writing business plans for outside parties, professional business plan writers write with a sales mentality. It is not just about presenting the details of a business. It is about writing a plan, or in this case information memorandum, that will command the attention of the outside parties and presenting the business in the most saleable way possible.

Professional

One of the main reasons to hire professional business plan writers is in the term itself: they are true professionals. Serious businesspeople like investors, bankers, and lenders expect to see information presented in a specific way. They don’t like “fluff” but, they do expect information to be presented with a certain level of formality and formal business language. Professional Business Plan writers are used to writing in this style by default.

Visual Appeal

In addition to being sales-minded and producing a professional information memorandum, professional business plan writers will also make sure the information is presented in a way that highlights the most important aspects of a business in a way that is visually appealing and memorable. Potential investors or acquirers may see dozens of information memorandums or business plans per day. It is important that your document, regardless the format, quickly captures their attention and is as easy to look at and follow as it is informative. Professional business plan writers know how to meld these aspects together seamlessly.

Regardless your role, if you are responsible for creating the information memorandum, there are multiple reasons to hire professional Business Plan Writers. This is just a highlight of some of the most obvious and practical reasons. It is always best to consider all of your options when you are planning to sell or seek majority share investors in your business. Involving professionals in every aspect, if feasible, will almost always lead to better results.

 

The Importance of Market Research in the Business Planning Process

Market Research is the process of gathering valuable information about your target market and identifying the needs and preferences of potential customers. This research is most important during the initial business planning process, prior to launching. It is also appropriate for existing businesses as they evolve and look to grow.

 

Read More The Importance of Market Research in the Business Planning Process