You have a great idea. You’re anxious to start. What’s the next step? Market research of course. And how hard can that be? You read a couple of analyst reports, maybe run a few surveys or do some A/B testing on a landing page. If you have time call a few customers but more likely ask a few people you know what they would want. It’s not important since your building the product you want to use. So market research shouldn’t take more than a month, six weeks top.
If you think that, you are wrong. Market research takes 12-18 months.
Let’s start with what market research is. Market research is the process of becoming an expert in your chosen market such that people will pay you money for a good or service. It is knowing everything about the competition, their pricing and customers. It is knowing your customers inside out. What their problems are and how they currently solve them. It is knowing competing solutions and future trends.
How long does it take to become an expert? Think about how long it takes to become proficient in a new programming language. Or to become competent in a new sport. Malcolm Gladwell asserts it takes 10,000 hours. That’s 14 months if you live breath eat sleep your market.
Believing that you can become such an expert in 4 weeks is arrogant.
Why is this important? How long it takes to complete your market research is how much runway you will need. When you look at it like this, you can see why all investors and advisors recommend raising 18-24 months of capital. Because that is how long it will take to get to the point people will pay you. That is how long it will take to complete your market research.
So if you think 6 months runway is more than enough to research your market and build a product, think again. Unless you are incredibly lucky you will find yourself beginning to understand what your market might want just as you are running out of capital. Plan and budget accordingly.