“I want to start a business but have no idea what industry to be in and what type of business it should be. Where do I start?”.
I get this question very often, so I have decided to write an article on it.
Ideation, which is the process of generating ideas, is a whole topic by itself. But after you have generated dozens of ideas, what do you do?
If you’re going to start a business, you’ll want to know if there’s a market for the product or service that you plan to sell. How do you get a gauge of the market size?
One great method is keyword research. The purpose is to see how many people are searching for your product using certain keywords in your chosen market.
Google has a great FREE tool called Keyword Planner that can help. It is free for you to sign up for a Google Ads account, and then you can start using Keyword Planner without the need to start an advertising campaign.
And unlike many other free tools, there is no limit to the number of keywords you can research per day.
Below is a step-by-step guide to help you get started.
How to Sign up for a Google Ads account
The first step is to visit https://ads.google.com/home/ and press Get Started.
If you already have a Google account, please sign in. Otherwise please create a new account.
Do not click Next. If you do, you’ll be using Google Ads in the Smart Mode. This is a simplified version of Google Ads, which doesn’t include Keyword Planner. Instead, you should scroll down.
Click “Switch to Expert Mode”.
Click “Create an account without a campaign”.
Review your business information and click “Submit”.
Click “Explore your account”.
How to use the Keyword Planner Tool
Press Tools and Settings, click the chevron beside Planning and choose Keyword Planner.
Choose “Discover new keywords”.
Now, this is where Google’s Keyword Planner gets the most interesting. It has the most powerful geographical targeting function I can find.
Many other free keyword research tools can provide country-level data, but do not have the ability to zoom in to state or city level.
By default, Google will use your current location. However, you can choose to research markets in other places, even in other countries.
Let’s say I am in Singapore, and I’m planning to sell shoes to Mumbai, India. I can click on the location icon, enter “Mumbai” in the search bar, then select the most relevant region.
Remove your current location by pressing the “X” at the side if you only want to see the search volume forecasts of your target region, then click “Save”.
Type in your keyword in the search bar and click “Get Results”.
And voila! You get the average number of monthly searches for the keyword “shoes” from people located in Mumbai, India over the past 12 months.
Not only that, but you can also see a list of related keywords which tell you what kind of shoes are the most sought after.
If you mouse over any of the small charts, you can see the search trend over the past 12 months for that keyword. This helps you identify any trends in the demand for the product.
One thing you might want to do is to sort the keywords by the search volume. You may not want to focus on a product that has too small a market. Doing so identifies the market segments which have the most potential.
After running through the list, you may want to narrow down your research into a handful of keywords. For illustration purposes, let’s just look at these keywords:
shoes for men
crocs for men
croc tennis shoes
You can now use the second part of the Keyword Planner tool. Go back to Tools and Settings > Keyword Planner and select “Get search volume and forecasts”.
There are two ways to get search volume and forecasts. If the list of keywords is small, you can do it manually by entering one keyword per line and then clicking “Get started”.
If you have a long list, you can upload it in bulk using the steps below.
Click “Upload a file”.
Download the Keyword Template.
Enter the keywords you want to research, one keyword per line, then save the file.
Click “Select a file from your computer”.
Select the file you just saved and click “Open”.
Again, Google may choose your current location as the default. Click on the location icon and choose your target location instead.
And finally, what you will see is the search volume history of each of your keywords in your target region over the past 12 months. The results are:
croc tennis shoes – 10
crocs for men – 8,100
nike shoes – 22,200
shoes – 27,100
shoes for men – 22,200
Interpretation and Market Selection
Now comes the difficult part. What do you do with all this data?
There are 4 main things you’d want to look at.
- Search Volume
- Branded vs Generic
- Broad vs Targeted
The first thing you’d want to look at is the search volume.
Obviously, you won’t want to be selling croc tennis shoes because the search volume is pathetic.
But if you target just “shoes”, it may be too broad a market for you to capture. If your resources are finite, it is generally better to focus on a niche and dominate it instead of trying to capture a bit of everything.
However, you cannot take the numbers provided by Google at face value. It is best to read it in relative terms.
In other words, you cannot conclude that there are really 8,100 monthly searches for “crocs for men”. But what you can reasonably conclude is that Nike shoes are almost 3x more popular than crocs for men.
The second is to see whether the customers are searching for a specific brand. In the above example, “nike shoes” has the second-highest search volume in Mumbai, after “shoes”.
But do you have distribution rights to sell Nike shoes? If not, then it may not be meaningful.
The third is to look at the trends. You don’t want to sell something that has been trending downwards consistently for the past 12 months.
Instead, look at something that has a stable demand, or a trending demand.
In the above example, “crocs for men” seems to be a trending product. But this is a double-edged sword.
If you catch a product as it’s trending, you can potentially make a lot of money. But if this is just a passing fad, then you may also risk losing a lot of money when it’s no longer popular.
If you prefer long-term stability, then it’s better to sell evergreen products that have a stable demand all year round, like “shoes for men”.
Finally, as I briefly mentioned above whether you want to target a broad market like “shoes” or a narrower market like “shoes for men” is often a question of resource.
If you have a lot of money and can sell a huge assortment of shoes, then targeting the entire shoe market may make a lot of sense.
But if your resources are limited, then it’s probably better to focus on a narrow niche, dominate it, and then move on to the next niche.
Keyword research is a powerful method that works very well for products and services that already exist.
But if the product is totally new and the market doesn’t really know about it yet, then you need to modify your keyword research strategy.
For example, before the thumb drive was invented, nobody in the world was searching for “thumb drive”. Therefore, the search volume for “thumb drive” would have yielded results of 0 or close to 0.
In such cases, you’ll have to use proxy keywords.
For example, potential customers for the thumb drive may be searching for keywords such as “portable data storage”, which describes the function of the product.
They may also be searching for “CDs “or “floppy drives”, which were substitute products that the thumb drive was meant to replace.
Using these proxy keywords to do keyword research will be the best way to gauge the approximate market size.
I have seen a lot of start-ups fail because the founder “felt” there was market potential for their product and service but turned out to be wrong.
I’m not against using gutfeel. In fact, I am a proponent of entrepreneurs trusting their gutfeel more and not over-analysing things.
However, if there is data available, why not use it? If the data validates your gutfeel, then you can pursue the opportunity with more confidence.
But if the data contradicts your gutfeel, then perhaps you need to think twice. For example, what you felt was a trending opportunity may have already started trending down without you realizing it. Keyword research would have surfaced that problem and helped you avoid a bad investment.
No plan survives contact with the enemy, that is true. But what’s also true is that if you fail to plan, you plan to fail.
This article helps address the first part of the question, which is the industry to be in.
After you have chosen the industry, the next step is to find the most suitable method with which to enter.
For that, I have written another article that discusses the various ways in which businesses can be started with little or no money.
Have a read here: