10 considerations for starting your own research firm

Have an entrepreneurial itch? Take these tips to heart.

Editor’s note: Barb Gasper is president of Focus Research and Strategy Inc., Golden, Colo.

The thought of moving from a corporate research department to head out on your own can be a daunting and off-putting notion. The key is to know what you are getting into by doing a little “research” before you decide to leave. Ponder these 10 considerations, which are based on advice gleaned from interviews with founders of start-up marketing and research companies.

1. What makes you unique? There are many research suppliers that offer a multitude of services. Like a brand, how do you plan to position yourself in a competitive marketplace? What is your point of difference? What knowledge or expertise can you offer that the next supplier cannot? You have, at most, a minute to set the hook and pique a client’s interest during a new business call. This point of difference is your “headline” as you make the call. Do you bring a new perspective? Do you have expertise in working with teens? Are you a sports marketing research expert? Do you have experience in new product development? What background or unique talents make you better than others for the job? Put together a marketing plan and a mission statement. Target your clients carefully and play to your strengths. If you worked for a toy manufacturer, don’t target medical or senior-citizen research.

2. Do you have a knack for selling? We marketers on the corporate side have marketing skills. We position brands, invent new ones, figure out marketing angles, analyze research data and do very little selling to outside clients. Suppliers pitch us - we are the ones being sold.

Job one as you start your own business is selling. You must be good at it. You must be able to take rejection. Even if the phone is ringing with interested clients, you will still need to sell yourself. Why are you the best choice for the project? What is your track record? What are your capabilities? Each conversation is like a job interview.

Ask yourself if you are a good listener. The best way to get the job is to address the client’s concerns and needs. The only way to do this is to listen to what keeps them up at night. This not only helps you design the best research solution, it also gives you ammunition to pick out the key insights that address their concerns as you summarize the data.

Selling well involves persistence, putting yourself out there and risking rejection. If you don’t like rejection and knocking on doors, think twice about going out on your own.

3. Do you have the contacts to sustain a business? If not, wait. Timing when to leave is integral to your success. Leave too early and you may be short on contacts or skills to sustain your business. Wait too long and you may miss a great opportunity. Do some research among your network of pals and colleagues. Tell them you are thinking of doing your own thing and ask for advice and their honest opinions.

Beware of bias as they are, after all, your friends and colleagues. Expect to hear encouragement and niceties since many of them are your current providers and don’t want to lose business in case you stay.

Listen for real commitments. If you hear, “We could use you on this project next month,” or, “Are you available to moderate our exploratory groups?” it’s a good sign. These are time-bound and project-specific statements of interest. Others will say, “You are going to be so successful,” or “Call me when you get out on your own” or, even better, “If I can help you in any way, let me know.” These comments really mean, “Good luck - I see you as a competitor and if you need a supplier to partner with, call me. I need the business too.”

Don’t neglect to include your co-workers as future clients. Many suppliers leave a company and contract back with the company they left. This works well and offers an initial sustaining piece of business. Never burn bridges and, before you leave, be sure to pitch some specific work. Companies always need a pinch-hitter and who better to fill in than you since you know your way around?

4. Try it on first; moonlight. If you work in the corporate world, you have weekends, evenings and vacations available to you. Work a project on the side. Approach a client that is non-competing to your everyday job and offer your services at a discount or, even better, at “pass-through cost” to get your foot in the door.

Moonlighting allows you to see if you like working from the other side of the desk. As a client, you call the shots. Leaving corporate is a complete role reversal. As a provider, you work to accomplish the client’s objectives, not yours. Try out a project or two. Did you have fun? Was doing the heavy lifting for others something you want to do in the long run? Moonlighting allows you risk-free experience to see if you like life as a business owner.

5. Plan your cash flow. Job one is selling. Job two is cash flow planning. When you work in corporate, you have a guaranteed check; same dates each month. On your own, you never know when or where the next payment is coming from. You must have money packed away to handle the cash ebb and flow in the early stages of your company. Can you make the mortgage payment without steady income for six months or, in the worst case, a year?

Most businesses, according to accountants, fail due to cash flow issues. Put together a financial plan not only for business expenses like office space, equipment and staff but also for personal expenses like your mortgage, heat, gas and food bills. How much monthly income do you need and how long will your stash of cash last in the event you are short on any given month? Forecast your income based on active proposals and remember, as the owner, the last person that gets paid is you. The good news is that in good times you get paid well and you also decide the bonus check amount!

6. Network. Nothing new here, but it’s often overlooked in the business of setting up a business. Get names from your network of contacts and then follow through. The best time to network is when you are new to the game and seeking advice. Schedule coffees, lunches and conference calls with contacts. Ask questions, learn about new methodologies and find out how other researchers built their business. People enjoy telling their success stories and hearing them will spark new ideas for you. Listen actively and you will pick up a tip or two that you can apply. You might even find yourself working together on a project in the future.

Join the industry associations, the chamber of commerce, clubs and business groups in your area of expertise. Offer to speak at events. Accountants and lawyers can also be a good source of referrals. Lawyers trademark new brands and accountants work with local businesses that are looking to expand through marketing. Our payroll service provided a referral. Get contacts from your contacts and then make contact!

7. Find outsource suppliers. As a research provider, you will need an expanded network of suppliers. No longer is the tab expert just down the hall. Start-ups outsource many pieces of a research project vs. hiring internally. Filling your Rolodex with reliable suppliers saves you time when you are bidding a project. What are the best focus group facilities in Seattle? Who can supply video monitoring equipment for an offsite observation? Who can type transcripts? What are some reliable tab houses? Where do I find representative panels for online research? Who can I partner with when I need advanced analytics? What company can quickly and accurately print and mail a written survey? Get referrals; one bad supplier can ruin your client relationship forever.

Before you leave, pay attention and ask questions of your research partners. Was your moderator happy with the recruit? Did the product test run smoothly? Was the data processed on time? Did the cells fill quickly? Take notes, keep a file and ask a lot of questions.

8. The business of business. When you go out on your own, you are not only the research and sales expert, but also the finance, travel, legal, insurance, payroll, accounting, benefits and health care expert. Taking this on can be overwhelming, but as ad man Carl Ally put it, “Either you let your life slip away by not doing the things you want to do or you get up and do them.” Get up and get savvy on the business of running your own business.

Find a good accountant. Discuss what kind of corporation should you form. Taxes are inevitable and accountants can help you learn the tax implications of a C corp. vs. an S corp. vs. a LLC. Look up the IRS - yes, the IRS! Find out tax filing dates, forms and expectations. Figure out if you want to file online or via mail. If you don’t want to deal with filing forms quarterly, hire a payroll service.

What about retirement planning for small businesses? What health care options exist for small businesses? Call your colleagues and learn what other small businesses do. As the saying goes, “Never a dull moment.”

9. Park your ego. You don’t know everything, even if you think you do. Set your pride aside and be smart enough to play dumb when you are out of your league. If a client needs a price elasticity study or a forecasting model for a new product, don’t take it on unless you have the experience and the technology. Partner with colleagues who are experts and who have the tools needed for the job. Clients appreciate it when you pull in expertise to tackle their problems. You will deliver a better product and will retain clients for the long haul.

10. Set sail. Your ship won’t come in if you lay anchored in the harbor. You won’t ever own your own research company unless you go and do it. You have a vision of what it will be like, but remain flexible. The end product will look totally different from where you start. You may begin moderating groups; however, clients want you involved in quant tests that follow. You may find agencies need a planner to pinch-hit on a project. Why not work in partnership? Be open to new opportunity knocking.

Get out and do it

A good sign that you are ready is when you find yourself thinking, “I can do better than this moderator, this analysis, this process, etc.” If you find yourself thinking other companies can benefit from your area of expertise, you probably are getting the urge to get out and do it. Once you commit, commit fully. Don’t experiment and see how it goes - you have to believe you will be a success. Put your whole heart into it and don’t look back. Good luck!

The 10 best things about working for yourself

1. You like your boss!

2. You keep your own hours. Work as much or as little as you like. Warning: if you are good, you will be in demand; expect the former.

3. The work is diverse. Working for one company, it’s the same products, the same people. When you own your own company, you work on different types of projects, solve different problems and work with new clients that fully appreciate your contribution.

4. Travel as much or as little as you like. Caution: if you target national or global clients, plan to travel and have a sturdy suitcase with wheels.

5. It’s fun work. Are you motivated because you love the work or are you looking to make more money? Make sure you love what you do and the money will come. For those looking to make a fortune, beware: It may happen but only if you are passionate about what you do.

6. Constant learning. Running your own business, you are the jack of all trades. You will learn that the more you learn about running your own show, the less you know.

7. No corporate stress. Stress is that which you create or choose not to create. For small-business owners, the number one stress point is having a steady flow of income to pay the bills. The best advice? Start small and grow within your means.

8. Reconnecting with colleagues. You will reconnect with people you haven’t talked to in years. Working inside a corporation, your contacts are focused more internally than externally. Enjoy the coffees, the lunches and the reestablishing of collegial relationships.

9. You can dream big or small; stay local or take on global clients. You get to decide whether to expand your business or stay small and nimble. Suit yourself; it’s yours!

10. You really like your boss!