New Entrepreneur: A Broader Perspective - Business Tip # 5

It's a bigger world. You're still a small fish. Fortunately, the secret to survival is well within your grasp. As the new entrepreneur on the block, the key not only to your survival, but also to your success, lies in conducting research in your prospective industry both before and during your entrepreneurial endeavor. Even the most innovative and promising ideas will fail as a result of poor industry conditions. Eager entrepreneurs often either fail to recognize the unfavorable industry climate or lack the patience necessary to weather the conditions. Even when they do recognize turbulent periods, some entrepreneurs jump the gun and introduce their ideas at the first sign of tranquility, unaware of the fact that they are only in the eye of the storm.

So what does all of this mean for you? You probably already know that competition would be a vital part of the entrepreneurial experience, and you probably already know that successful businesses are familiar with their respective industries. With the expansion of technology (especially in the realm of computers) in recent decades, an abundance of information can become available both cheaply and easily to anyone who desires it. However, this abundance of information may overwhelm the unprepared, inexperienced businessperson.

That's where we come in. Although local libraries, government agencies, and the Internet provide plenty of available resources, this information is worthless without a means to analyze it. We aim here to provide you with the necessary tools.

•  Effectively learn from your competition.
•  Research your competitors and industry cost-effectively.
•  Correctly and profitably identify current trends and conditions in your industry.
•  Recognize the hottest upcoming trends for the twenty-first century.
•  Interpret basic economic concepts and recognize common misconceptions.
•  Develop your own plan of research.

NOTE: Research?

The word research sends shivers down many of our spines, as visions of 50-page thesis papers dance in our heads. However, you must realize that knowing your industry is serious business, and dedicated research is the only way you're going to familiarize yourself with your industry. Conducting research for business is just like participating in a big scavenger hunt. The hunt itself may be tiresome, but when you discover the information you need, not only does a feeling of self-satisfaction envelop you, but profits could soon be filling your pockets as well. But first, let's get back to business.

Put Your Business to the Test

Before even introducing your idea, you should examine your industry climate. This involves some self-evaluation of your relative position and situation within the industry. You should be able to predict the level of performance of your business under practically every possible set of circumstances. Asking yourself the following questions will give you a solid introduction to your industry.

How Will Your Individual Business Cycle Relate to the Overall Business Cycle?

Like everything in life, the overall business cycle experiences ups and downs. Generally speaking, there are booms in which the majority of the people enjoy prosperity, and there are recessions in which the majority of the people don't. Unfortunately, your business is not immune to this roller-coaster ride. However, by knowing how the peaks and troughs of the country's business cycle affect your individual company's cycle, you can smooth out your own ride and mitigate any drastic climate shifts your company must endure.

For instance, the business cycles of substantial consumer goods such as housing and luxury automobiles usually run simultaneously with the overall business cycle. These products and services are thus very cycle sensitive. Goods not sensitive to the collective business cycle are termed countercyclical, whenever the nation suffers from a recession, these goods become more popular (and vice versa with economic surges). If you plan to start a business in the discount department store or used automobile industry, slower growth for the entire economy may actually increase the demand for your goods.