Market research for small business: Find insights and grow your business

Published Wednesday 5 November 2025

Table of contents

• What is market research
• How market research can help small businesses
• Types of market research methods
• When should you use market research?
• Step-by-step market research process
• Stay focused
• Tools for small business market research
• Effective market research for small business – five top tips
• Know the limits of market research
• Getting the most from market research
• FAQs on market research

Key takeaways

• Define specific business questions before conducting market research rather than gathering general information, as focused research yields more actionable insights that directly inform business decisions.

• Leverage free and low-cost tools like Google Forms, social media polls, government statistics, and online forums to conduct effective market research without significant financial investment.

• Combine primary research (surveys, interviews) with secondary research (existing data, industry reports) to get a complete understanding of your market while maximising cost-effectiveness.

• Time your market research strategically around critical business decisions such as launching new products, entering new markets, or seeking funding to maximise the value of your research investment.

What is market research?

Market research is the process of gathering information about your customers, competitors, and the overall market, which can include using government data to compare to other businesses and understand industry performance. You can use market research to make informed business decisions.

It helps you understand who your customers are, what they need, and how your business can meet those needs better than anyone else. Market research helps you reduce risk and find new opportunities, so you can grow your business with confidence.

How market research can help small businesses

Market research helps you make smarter decisions by understanding your customers and competitors. This knowledge reduces risk and increases your chances of success.

Key benefits for small businesses

• Reduce costly mistakes: Validate ideas before investing time and money
• Find profitable opportunities: Identify gaps in the market your competitors miss
• Understand your customers: Learn what they actually want, not what you think they want
• Make data-driven decisions: Replace guesswork with facts

Learn more about competing with bigger businesses.

Types of market research methods

There are two main types of market research methods. You can use both to get a complete view of your market.

• Primary research: This is new research you conduct yourself to answer specific questions. It includes things like customer surveys, one-on-one interviews, and focus groups. It's tailored to your exact needs.
• Secondary research: This involves using existing information that has already been collected by others, such as government statistics, industry reports, articles about your market, or even programs like the ASX Research Scheme, which provides reports on over 100 small-cap companies annually. It's a great way to get a broad understanding quickly and at a low cost.

When should you use market research?

You will get the most value from market research when you are making important business decisions or changes. Use it whenever you are considering changes that could affect your revenue or customer base.

Critical timing for market research:

• To see whether a new business idea is viable: You have an idea for a new business. Is there a market for it? Don't just guess – use market research to find out.
• When moving into new markets: This is especially true when selling abroad. Different countries have different markets; for instance, a 2024 survey showed only 9% of Australian small businesses created new jobs compared to 33% across the Asia-Pacific region, highlighting different economic conditions.
• Before launching a new product or service: You might think you have the perfect new product or service – your customers may think otherwise. It pays to get feedback before you launch, so you can make any necessary changes quickly.
• When applying for funding: Show potential investors that there's a gap in the market – and that your company is the one to fill it.

Step-by-step market research process

You can do market research yourself by following a few simple steps.

1. Define your question: What do you want to find out? Be specific. Instead of 'Is my product good?', ask 'Which features of my product do customers value most?'.
2. Choose your method: Based on your question, decide if you'll use a survey, interviews, or look at existing data.
3. Collect the information: This is the 'doing' part. Send your survey, conduct your interviews, or dive into the data.
4. Analyse your findings: Look for patterns, themes, and surprises in the information you've collected. What is it telling you?
5. Take action: Use your newfound insights to make smart decisions for your business.

Stay focused

You will get better results by focusing your market research on specific business questions. Define your questions first, then choose the right method to answer them.

How to stay focused

• Start with your business question: What specific decision are you trying to make?
• Identify required information: What data would help you make that decision?
• Choose the right method: Survey, interview, or observation based on your information needs
• Avoid scope creep: Resist adding 'nice to know' questions that don't serve your core purpose

Tools for small business market research

You can use many free or low-cost market research tools to get useful insights.

• Online survey tools: Platforms like Google Forms and SurveyMonkey offer free plans to create and send surveys to your customers.
• Social media: Your social channels are a goldmine. Use polls, ask questions, and read comments to understand what your audience is thinking.
• Government data: Websites like the Australian Bureau of Statistics (ABS) provide a wealth of free data on demographics, industries, and economic trends.
• Online forums: Find out where your target customers hang out online, such as Reddit or industry-specific forums, and listen to their conversations.

Effective market research for small business – five top tips

Effective market research requires the right approach and timing. These five strategies help small businesses maximise their research impact while minimising costs.

Five essential market research strategies

1. Start researching early: Begin research before making major decisions, not after you've already committed resources.

2. Leverage free resources: Use existing data from government statistics, industry reports, and competitor analysis before paying for new research.

3. Listen to current customers: Your existing customers provide valuable insights about what works and what doesn't in your business.

4. Use : Online surveys and social media monitoring are cost-effective options, especially as research shows a significant portion of small business revenue is from online sales, though Australian businesses lag behind their regional counterparts.

5. Focus on actionable insights: Collect data that directly informs specific business decisions, not general curiosity.

You can use free tools like Google Trends and Google consumer surveys to see what people are searching for. For example, if many people are searching for glow-in-the-dark cat collars and no one is selling them, you may have found a gap in the market.

Know the limits of market research

Market research has its limits and will not guarantee your business success. Knowing these limits helps you use research findings in the right way and set realistic expectations.

Why market research is not perfect

• a small sample of your potential customers might not be representative of the whole market
• people don't always say what they truly believe in surveys
• the research might not take new trends into account
• the way your business acts in the market will change the outcome

Market research is still useful for small businesses, but you should consider other factors as well as your research findings.

Trust your instincts, as they are often based on your experience in the industry.

Getting the most from market research

Market research helps you make informed decisions, even with a limited budget. While it cannot guarantee success, it improves your chances by reducing uncertainty and revealing opportunities.

Getting started with market research

• Combine data with intuition: Use research to validate your business instincts, not replace them
• Start small and scale: Begin with simple, low-cost methods before investing in complex studies
• Track your finances: Monitor research costs and business performance with accounting software like Xero to measure your return on research investment
• Make it ongoing: Regular market research keeps you connected to changing customer needs and market conditions

FAQs on market research

Find answers to common questions about market research below.

What do you mean by market research?

Market research is simply the act of gathering information to better understand your customers and your market. It helps you make informed decisions instead of guessing.

What are the 5 methods of market research?

Common methods include surveys, interviews, focus groups (talking to a group of customers at once), observation (watching how people behave), and secondary research (using existing data).

What are the 7 steps in marketing research?

A typical process includes: defining the problem, developing a research plan, collecting information, analysing the findings, presenting the findings, making a decision, and taking action based on that decision.

How much should a small business spend on market research?

It doesn't have to cost a lot. You can start with free methods like analysing your own sales data, running social media polls, or using government statistics. Spend what feels comfortable, and focus on getting clear answers to your most important questions.

Can I do market research myself without hiring experts?

Yes, absolutely. Many effective market research activities can be done yourself, especially with the free and low-cost tools available today. Starting small with DIY research is a great way to build your understanding.