Dear Design Doctor
I am the founder of a new furniture and product brand. I set up the business last April and our first furniture range is being sold with a major retailer nationwide. I am writing a new business plan and would like to read about the size of the UK industry to understand the opportunity in more detail.
I wondered if you had any information you could share with me? Alternatively do you know where else I could look?
The Design Doctor is Patricia van den Akker, Director of The Design Trust:
‘To be honest your question is a big one, which comes up fairly regularly. Very often this question is asked when people are developing a business plan, as you need to be able to evidence your market. Many start ups are then looking for statistical information to get an idea of the market or market share, as this is often recommended in traditional business planning books.
The first issue is that you need to be far more specific in what you are looking for to formulate the questions that you need answers to. Are you looking for ‘How many tables are being sold in the UK per year?’, ‘How many competitors you have got?’, ‘What the average expenditure level is of UK families for furniture per year?’, ‘What the average spend on tables is? So, my first question to you would be: What do you really need to know?
Then the easy answer to your question is that you can find general information about the market in the trade press, furniture trade organisations or the British Library, who have a fantastic trade section.
However if you want specific information then this is probably not available anywhere as nobody is keeping that kind of data.
The second issue is that statistical market research has very limited use for a small creative business due to the small size of the comparable market e.g. don’t use figures for the whole market if you are a contemporary furniture designers.
The last and third issue is that start-ups create goals based on these statistics that state something like ‘I want to get 1% of the market share’. You can’t really extrapolate on the small scale you operate in and you are often comparing apples with bananas e.g. the contemporary furniture market is very different from the more traditional or even craft furniture market.
So how is statistical information useful for your creative business?
Statistical information is especially useful if you compare yourself with yourself e.g. year on year growth, or with very similar companies in size or age who compile very similar financial and business figures through confidential bench marking programmes. Accountancy software organisation My Cake has got a component of benchmarking of small creative businesses, which is useful to compare yourself against other designers.
What market research is practical for my furniture business?
Despite everything I wrote previously, I do think market research is essential for any business! Not just when you are starting up, but on an ongoing basis. Also I am a big believer in doing practical market research that gets you the answers you need, and that is useful, without taking up too much of your time.
I strongly suggest that you research your closest competitors or role models in detail. Identify 6 businesses that are 2 – 5 years ahead of you, and 1 – 2 companies that are 10 or 20 years ahead of you. Really look at (UK and international) businesses that are as close as possible to what you offer. Look at people and businesses that you admire and maybe even envy.
Create a matrix with each of these competitor’s names on the top row, and the criteria in the left hand column.
Identify your criteria such as:
- what are their specific products and or services,
- what are the price ranges,
- who are their clients, where do they show/publish/market/sell their work?,
- what are they really good at?, what are their weaknesses?,
- what are the kind of problems they try to solve?,
- what are their values?,
- what makes them stand out in the market place?,
- who are their subcontractors?, who are their partners?,
- what is the size of the business (£ or people),
- what can you learn from them?
Look at criteria that make sense to you to differentiate yourself in the market place. Really identify what their niche market is. For more information about niche marketing look at these previous blogs: What is niche marketing?, and How to identify my niche market?
Spend an afternoon researching your competitors or role models in detail through website research, trade journals etc. Filling in each of the fields of the matrix for each criteria and competitor.
Finish the exercise with giving the same information about your own business. If you have just started you might start to think about what products you would like to offer in two years time, where you would like to sell in two years time etc.
This is a great way for you to learn how to position your business in a crowded market place, and to give detailed, relevant and realistic information for your business plan around your future market, products/ services, with whom you want to work.
It also should answer the question in what makes you different from what is out there already, and more importantly what makes you better or do you have to offer specifically to the existing market?
From this competitor research you can then start setting some financial and marketing goals for your business plan, such as I want to have a turnover of £25K in year one, and I will achieve that through x projects or working with x clients.
Instead of statistical information you can also look at checking the number and relevance of what you want to do through Google keywords. From your competitor research you got a list with some specific keywords describing your work and business. Use the Google keyword tool to check how relevant this is for the public searching for specific products or services.
This kind of research can just give you some indication in how to tweak what you want to do to the right market. Having too many or too few competitors is neither a good sign, go for something that is in the middle.
Another quick warning around market research is not to ask your friends and family for feedback, as they are unlikely going to be your clients (your mum will always say that she loves it :-)).
Instead identify specifically who your target client is going to be. Identify specific demographic information such as gender, age group, where they live (rural or urban, family home or retirement flat etc), what they read and listen to etc.
But increasingly more important is to think about their values, their behaviour, their beliefs, their passions. For example look at people who attend craft fairs, love country houses, are moving home soon (one of the main times in somebody’s life to buy furniture!), have commissioned crafts or art before etc. Even with trade buyers really look at what else they are buying, does it fit with their brand, price range etc.
If you have found a couple of people who fit your target market then get some specific feedback from them. But again due to the small size of the sample group, don’t get too carried away with the feedback.
From all this feedback and a continuous ‘scanning’ of the market you can really learn a lot. This can really influence how you work, with whom you work, what products or services you will launch next, at what price level or what materials or colours you will use.
I hope this has given you a more practical and useful way to do qualitative market research, then looking at statistics.’
What market research do you use? Did you find this blog post useful then share it with others.