As the economy shows signs of recovery, so are small businesses across the country who are starting to think about more than just survival mode.

According to TD Bank’s 2021 Small Business Survey, nearly 40% of small business owners shared that they were considering growing their product lines and services to increase business revenue and profits.

“COVID-19 required small businesses to adapt to new business operations and incorporate new revenue-generating strategies nearly overnight,” Jay DesMarteau, TD Bank’s Head of Commercial Distribution, said in a post on the company’s blog. "Entrepreneurs are incredibly resilient, though, and it is encouraging that they report a more positive outlook and do not anticipate losing their livelihood."

According to the survey, 41 percent of more than 750 small businesses reported that they expected to grow their revenue in 2021. Just 9 percent of those surveyed shared that a decline in revenue was likely.

Small Businesses Switch Focus to Expansion

Expansion and growth have not been a priority for many small businesses over the last year. Focusing primarily on the success of their core markets, it was considered too risky of a move. Now, with the economy starting to level out, some small businesses are ready to explore new opportunities.

Nearly two-thirds of small businesses anticipate expanding hours and/or operations, according to the survey.

Although businesses are starting to adjust their growth mindset, Hanover Research, specializing in market research and analytics, advises against rushing forward.

“To successfully adapt to these new market trends, it is critical that organizations rely on data, not guesswork, when making growth decisions to reduce risk and maximize returns,” according to Hanover Research  in its “Step-By-Step Guide to Market Analysis.”

The 5 Steps to a Successful Market Analysis

In its guide, Hanover Research outlined the following five steps companies should follow when considering expansion opportunities.

1. Sizing Up Market Opportunity. Not all markets are the same – some may already have plenty of readily available information while others are more complex, requiring proxy modeling to get a clearer understanding. To quantify the opportunity, Hanover Research recommends asking the following questions.

• Market Sizing: How much potential growth exists? To answer this question, conduct either a top-down or bottom-up analysis.
• Total Addressable Market: What does your total market demand look like? What is the maximum opportunity size for this market?

2. Assessing the Current Market Trends. By understanding the state of the market, you will be able to determine its overall demand and health. This step is critical to decide whether to pursue growth. To determine sales conversion factors, consider conducting a sales analysis. Additionally, you may gain insight from current and prospective customers with a customer needs analysis.

3. Consider Market Restraints. A regulatory assessment will help companies understand what impacts they may face with a market. Besides examining regulatory standards, laws and pending legislation, Hanover Research recommends identifying items including industry associations, rules, regulatory standards, and/or certifications to help understand how it may affect the current and future market.

4. Study the Competition. Conduct a competitor saturation analysis to examine competitors by size and products/services offered to determine how intense competition is. Do your homework by researching competitor news releases and marketing campaigns so that you can use them to shape your own strategies. This step will help uncover areas where competition is limited and allow you an opportunity to meet unmet customer needs.

5. Monitoring the Market. A trends analysis is an effective way to stay on top of constantly evolving markets where a flux of new competitors and product/services offerings are the norm. Some components of the analysis are assessing the market, impacts to market expansion or contraction, and analyzing the potential end-users of your products and services.

Conducting a market analysis may seem like a tedious exercise. However, without one, companies face the risk of failure. Additionally, the rewards of performing a market analysis are significant. According to Hanover Research, 58 percent of businesses that conducted a market analysis experienced a 4x or higher ROI.

By following this step-by-step guide, your success at expansion increases exponentially. Besides gaining valuable insight to make wise growth decisions, conducting a market analysis enables you to stand out from your competitors and uncover unexpected opportunities within potential markets.