You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your market research firm. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a market research firm?
Those who are limited in capital have found success working out of a home office the first few years. However, if your immediate plan is to build a team and meet with clients in an office setting, you will need to invest in a professional office.
The following are standard costs associated with setting up an office:
- Lease - Cost varies, depending upon your region. Location should be easily accessible and centrally located.
- Office equipment - Computers, phones, and business software applications.
- Market research software - There are a number of software applications available, with many designed with a specific type of client or industry in mind. As time goes on, it might be cost-effective to employ a team of software developers that can build a software solution specifically geared towards your niche.
- Payroll and associated expenses - To attract (and retain) the very best in the industry, you must provide your workforce with pay relevant to their experience.
- Professional fees - In this business endeavor, it is recommended that you seek the guidance of specialized professionals. Hire an accountant to handle the books and an attorney to draw up contracts, etc.
- Supplier’s fees - Once you gain your first client, there will be supplier’s fees associated with each project.
- Insurance - Speak with a licensed professional regarding coverage requirements.
Should you opt to start out as the sole contributor to the business, start-up expenses would be fairly minimal compared to many business ventures. Owners should budget for a minimum of $25,000 in start-up expenses.
What are the ongoing expenses for a market research firm?
In addition to the standard overhead expenses that come with leasing an office space, expect to incur the following costs:
- Payroll - Offer an appealing benefits package to attract and retain the industry’s top talent.
- Supplier fees
- Website hosting
- Software and/or software developers
- Professional fees
Who is the target market?
There are a number of different paths you could take when it comes to defining your target market. The key is to find your niche and become an expert in this. As you build your team, hire quality professionals who have carved out their own niche.
What is your area of expertise? Do you want to work for direct clients or survey advertising agencies, consulting firms, research departments, or survey companies? Are your strengths in B2B market research or job satisfaction measurement?
How does a market research firm make money?
Your firm will generate revenue from each paying client. One customer’s needs will be different from the next. Your pay is defined by their short and long-term goals, the size of the company, and their budget. These will, hopefully, be ongoing clients that you build relationships with. Their growth signifies your value. The value your firm adds to the enterprise will define their needs moving forward, your role in this, and how much you’re able to charge each client.
How much can you charge customers?
Fees vary, depending upon the scope of the project. Two hundred phone surveys could bring in between $5,000 and $15,000, while mail surveys would generate $5,000 - $7,000 in revenue.
How much profit can a market research firm make?
Profits vary, depending upon ongoing expenses, the number of contracted clients, and the level of services you provide them. The National Average for a single employee business is just over $51,000.
How can you make your business more profitable?
To increase your profit margins, consider:
- Developing a full service marketing firm. Offer a full suite of services, such as content marketing and multimedia advertising firm
- Develop industry-specific business management and marketing tools and software solutions
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your market research firm is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a market research business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Market research businesses should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your market research business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
Certificate of Occupancy
Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a market research business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your market research business will be in compliance and able to obtain a CO.
Informed Consent Agreement
It is recommended to provide clients with informed consent agreements to decrease legal liability and encourage transparency.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a market research firm
There are a number of market researchers out there fighting for the same business you are. Consider your own business the firm’s first client. What does your target audience respond most to? Build a marketing strategy around that. Highlight your strengths through the use of existing contacts, networking, and cold calling. Get involved by attending conferences. Offer to speak at a conference or become a committee member.
Leaders in the Market Research industry urge maintaining a strong social media presence. Twitter, YouTube, Facebook, and LinkedIn are wonderful tools for making connections and building a client base.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Your first step is to build a reputation of trust within the community and with each client. Once this has been established, remain ethical and deliver results. Your customers understand your potential value, or they would not seek out your expertise. It’s up to you to prove your value.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Market Research Firm In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Individuals who enjoy understanding people on a deeper level make the best market researchers. They consistently seek new ways to grow and learn and are passionate about passing this knowledge on to others.
What happens during a typical day at a market research firm?
Your marketing firm’s top priority is connecting your clients with their current and potential clients. This means that the bulk of your day will be spent conducting research. This is an ever-evolving field. Your clients' customers are, in essence, your customers. Their needs are dynamic. Stay up-to-date on the latest trends and innovations in technology, as well as new research tools and methodologies.
When you’re not researching directly for a client, you are researching for your own firm and its future clients. To realize success in this industry, it is critical that you establish yourself as a thought-leader. A portion of each day is spent writing, both for your own business and your customers. Publishing white papers, blogs, and articles will help you make connections, marketing your business in the process.
Meeting with both clients and potential customers also takes up a great portion of each day. Some meetings may require travel, while others can be done via online conferencing. Scheduling, answering emails and phone calls, and other administrative duties are equally as essential to the success of your business.
What are some skills and experiences that will help you build a successful market research firm?
Regardless of how large you envision your organization growing, this endeavor will require attention to detail and strong leadership. A balance between confidence and a willingness to learn and grow is also critical. Industry leaders indicate strong bargaining skills would also prove beneficial.
While a marketing degree is not required, it would prove beneficial. It is recommended that you have a background in this industry, with significant knowledge in marketing, research strategies and tools, and qualitative and quantitative analytics. Since surveys are the most common research tool, it is essential that you be well-versed in the art of questionnaire creation. This requires strong communication and writing skills and naturally connect to individuals of every demographic.
What is the growth potential for a market research firm?
This industry is recession-proof and there will always be a need. The key to achieving significant growth is in putting your own skills to work for you. Before embarking on this business venture, consider what your long-term business goals are. Where do you envision this going? Technology has made everyone an “expert” in marketing and research. With a winning combination of talent and the proper tools, you’ll have the option to remain small and selective on your clients, or grow to a global scale. Both are equally rewarding paths.
TRUiC's YouTube Channel
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One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a market research firm?
- While it does not have to be complex, an informative and professional website is critical. This is how you will showcase what sets you apart from the competition. If you are unable to capture your target audience, how will you do so for your clients?
- Make sure your website is mobile-friendly. Don’t use Flash Player.
- Develop connections with leaders in your targeted field(s). They could be your greatest resource. Online magazines, government resources, published articles/books, and online encyclopedias are also great resources.
- Become a member of associations such as the American Marketing Association (AMA) and Data & Marketing Association (DMA).
How and when to build a team
When you build your team is up to your vision and the capital you have to work with. Thoroughly research each new candidate. Everything they do reflects back onto your firm.
Surround yourself from the beginning with a small team of mentors who you can trust. Pass that knowledge on, becoming a mentor for others just starting out in the industry.
Recognize your strengths and weaknesses and employ a team accordingly. Turn to legal and accounting professionals for their specialty, and hire an administrative staff that can handle clerical staff.