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Startup market research comes down to five jobs: define one customer, find the alternatives they use today, talk to them, size the market, then test demand before you build. FounderPal has a free tool for most of these steps.
What should startup market research answer?
Before you build, you need an answer to five questions:
- Who is the customer, specifically?
- Is the problem real and urgent for them?
- What do they use today instead?
- Is the market big enough to support a business?
- Will they pay?
If research does not move one of these answers, skip it. Everything below is ordered so each step feeds the next.
Step 1. Define your target customer
Pick one narrow segment, one situation and one need. "Small businesses" is not a customer. "Freelance designers who chase late invoices" is one you can find and talk to.
The free Target Audience Generator helps you list candidates. Enter a business description and a language. It returns 10 audience segments, each with a name and a short description.
Read the list and choose the one segment you can reach this month. Keep the rest as later options. Everything after this step is tested against that one segment.
Step 2. Find your competitors and alternatives
A startup has three kinds of competition: direct products that solve the same problem, indirect ways of solving it (a spreadsheet, an agency, a freelancer), and doing nothing. The last one beats most startups.
The Competitor Finder gives you a first list. Enter your business description, target audience, target market and the language of the report. It returns 10 competitors, each with a name, a website, a type and a short description.
Remove the ones your chosen customer would never consider, and add any they mention later in interviews. For how to compare the ones that remain, see the competitor analysis guide.
Step 3. Talk to potential customers
Interviews are the part of startup research that no tool replaces. You are looking for evidence that the problem exists, not praise for your idea.
Ask about the past, not the future. "Would you use this?" invites a polite yes. These questions get real answers:
- When did you last run into this problem?
- What did you do about it?
- What did you try, and what did it cost you?
- What was frustrating about that?
- Who else was involved in the decision?
Keep your wording neutral and do not pitch. Write down the customer's own words, because those words become your headline later. Keep interviewing until the answers start to repeat.
Step 4. Estimate your market size
Market size answers whether the business can be big enough. Define the customer, the geography and the time period first. A number without those three is not usable.
The Market Size Calculator gives you a starting estimate. Enter a business description, target audience, target market and language. It returns TAM, SAM and SOM, each with the amount of money, the number of people and the logic behind it. Read the logic and replace any assumption you disagree with. TAM, SAM, SOM explains how the three layers fit together.
For a US business market, the Census Bureau's County Business Patterns shows the number of establishments, employees and payroll by industry and geography. The Census Bureau's small business data page explains how to find your industry code and look up customers and competitors in an area. Outside the US, use your national statistics agency.
A large market is not demand. It tells you the ceiling, not whether anyone will pay.
Step 5. Check demand before you build
Demand is people acting, not agreeing. Use four checks, from cheapest to strongest.
- Run the idea through the Idea Validator. Enter the idea, the target audience and a language. The report scores priority, budget, consequences, competition, differentiation and marketing, so you can see which part is weakest.
- Use the Keyword Generator to see the phrases buyers might type and the intent behind each. It returns ideas and intent, not search volumes.
- Put up a one-promise landing page with a signup or waitlist, and send the segment from step 1 to it.
- Ask for a commitment: a preorder, a paid pilot or a booked call.
A signal is something that costs the customer time or money. A signup is a weak signal, a booked call is a stronger one and a payment is the strongest. Decide the signal you will accept before you run the test.
Primary vs secondary research
Startup research mixes two types. Primary research is information you collect yourself. Secondary research is information someone else already published.
| Method | What it tells you | Best for |
|---|---|---|
| Customer interviews | Whether the problem is real and how people describe it | Step 3, before building |
| Surveys | How common an answer is across a group | Checking a pattern from interviews |
| Competitor review | What alternatives exist and how they position themselves | Step 2, positioning |
| Public statistics | How many businesses or people fit your segment | Step 4, market size |
| Landing page test | Whether people respond to your promise | Step 5, demand |
Use secondary research to get oriented fast and primary research to make the decision.
What to do with your findings
Write the decision on one page: go, change or stop. Add the priority segment and the riskiest assumption you still have, then design the next test around it.
If the answer is go, turn the findings into positioning and channels with market research for your marketing strategy. If you want to repeat the steps for another idea, run it through [FounderPal](/) and compare the reports side by side.
FAQ
How long does startup market research take?
A first pass can take a few days: one day for the free tools, then interviews as fast as you can book them. Research is not finished at one point. You repeat it as your idea, segment or market changes.
How much does market research cost for a startup?
The core steps cost little or nothing. The free tools here, public statistics and your own interviews need time more than money. Paid reports are optional, and they are rarely needed before you have talked to customers.
What is the difference between primary and secondary research?
Primary research is data you collect yourself, such as interviews, surveys and landing page tests. Secondary research is data others published, such as government statistics and competitor websites. Start with secondary to save time, then use primary to test your specific idea.
How many customers should I interview?
Keep going until the answers start repeating, then stop. Interview people from one segment at a time, because mixing segments makes the answers harder to read. If every conversation says something different, your segment is probably too broad.