On-the-Cheap Market Research
When it comes to brewing up new companies and products, nothing replaces market research. Smart CEOs, however, know how to tap the many low-cost resources around them.
* Hitting the books. In 1988 Hugh Farrington needed to ground his business plan for Seaton Corp., a Chicago staffing-management company, in statistics to lend it credibility. He found exactly the competitive information he needed at the public library. The conclusions drawn from that information persuaded Ernst & Young to bring Seaton into its Entrepreneurial Services Group, which introduced him to the bank that lent Seaton $150,000 its first year, $800,000 the next.
* Getting it from the horse's mouth. In 1962, when Richard Essey, a San Francisco entrepreneur, was thinking about getting into the temporary-help field, he called William Olsten of Olsten Temps fame. What Essey gleaned from a chat with one of the kings of the industry whetted his appetite. Essey's TempPositions now enjoys sales of $17 million.
* Asking the professor. After 20 years of supplying siding, windows, and trim, and piling up $45 million in sales, Plymart could have afforded a private research firm. But Randy Mahaffey, CEO of the Norcross, Ga., company, called a local college marketing professor, who designed a survey of customers' perceptions of Plymart. The results persuaded Mahaffey to carry framing supplies, which have increased sales by 22%. "For less than $5,000, we got $100,000 worth of information," he says.
-- Susan Greco and Michael P. Cronin* * *