Company Creation Project: How to Do a Market Study

Verified 26 September 2023 - Directorate for Legal and Administrative Information (Prime Minister)

Do you have a project? Doing a market study is indispensable for make your project a success company creation. Market research helps determine whether your project has a chance of being successful or not profitable. It has to be done in multiple steps.

Step-by-step approach

What is a market research?

The market study consists of the precise description and theanalysis fine 4 items which make up your market, i.e.

  • The product you're going to sell: theoffer
  • The customers who will buy it: the demand
  • L'environment : time, place, trends, technologies, competitors, legislation, etc.
  • How you're going to sell it: distribution channels and business strategy (marketing).

What tools should be used to conduct a market study?

To conduct your market research, you need following tools :

  • Field surveys
  • Questionnaires
  • Research (internet, official websites, business websites, specialized press, social networks, blogs)
  • Analyzes and conclusions based on the information gathered

To gather this information, you can interview your competitors, industry entrepreneurs, future customers and project coaches (CCI: titleContent, CMA: titleContent, France Travail (formerly Pôle emploi), business networks, company incubators).

The Company Resource and Information Hub (PRISM) make available market studies covering all sectors industry, commerce, services and crafts in France and in many foreigner countries.

Who shall I contact

  • Company Resource and Information Hub (Prism)

    The Prism is a space within the François-Mitterrand Library (BnF, Paris 13) gathering documentation for professionals (market studies, business directories, specialized press, etc.). These resources are available on-site only.

    Address

    Quai François Mauriac

    75706 Paris

    Schedules

    Monday: Closed

    Tuesday to Saturday: 10:00 - 20:00

    Sunday: 1:00 PM - 7:00 PM

    Telephone

    01 53 79 59 59

    Rates

    €5 for a day ticket / €24 for an annual Pass

    Free access for jobseekers and beneficiaries of social benefits

    Free access for everyone from 5:00pm only.

Please note

Your analyzes must be based on the ground reality (market) and on encrypted data. The market study shall consist of information quantitative but also qualitative.

1era possibility: yourself

As the project owner, you can yourself your market research.

You don't need to have done economics studies to conduct your market study. Just take the time you need.

2eme possibility: a third party

You can have realized by a professional, but it is imperative that you were there up close.

As a future entrepreneur, you must involve yourself in this market study.

The following organizations may conduct this study:

Who shall I contact

Your offer matches your product or at your service.

You must describe this offer with information qualitative.

It's a question of answering precisely to questions following:

  • What is your product, what is its picture in the minds of consumers? What does it symbolize?
  • What's his added value compared to competitors' products?
  • At what need is he answering?
  • What solution is he bringing?
  • What hope does he bring?

Please note

The Chamber of Commerce and Industry provides a tool to analyze the needs of your customers: the Canvas method.

Working on the needs of your future clientele: the Chamber of Commerce and Industry's Canevas method

Your request corresponds to your futures customers.

You must describe it with information qualitative.

For that, be most accurate possible.

It's about answer to questions following:

  • Who is your product or service offering for?
  • Where do we live? your future customers? How?
  • What's their age, their sex?
  • What are their habittheir hobbies?
  • What are their problems ? And the solutions that they choose?
  • What are their social relationships? Their networks ? Their means of communication?

Your environment consists of all the settings external who go influence your offer and your request.

You must answer to questions following:

  • What is the market trend?
  • Who are your main competitors? What more or less do they bring than you?
  • Is there an upcoming event that will change the context? Examples are the Olympics, a factory closure.
  • In what technological environment will your product or service appear?
  • Is there any specific legislation that constrains or changes your strategy?
  • Have you planned the ecological impacts of your project and the solutions to be provided?

It can be useful to create a watch over your competitors, i.e. to monitor their marketing developments, their developments, etc.

L'Insee: titleContent make available tools to build competitor lists and for to analyze the environment of your project:

List your competitors

Insee: economic portrait of a territory

Company Directory: Find all information in a company

You need to determine how you're gonna sell your offer on the market.

The business strategy is also called in different ways: a marketing strategy, one business model, one mix-marketing or even a business model.

Answer the following questions

  • How will you publicize your company, what marketing (advertising) will be done for your product?
  • What will your rates be?
  • Who will be your suppliers?
  • By whom will your product be made?
  • What will your distribution channels be, where will your product be sold (internet, professional networks, shops, etc.)?
  • What will be the relationship with your customers, how to retain them?
  • Where will your products be stored?
  • What will be the development paths of your business (internet, national, international, etc.)?

Target all constraints

It's about anticipating what might be holding you back.

You need to identify what can drive up your costs: storage, production, distribution, communication.

Example :

  • Does the fluctuating price of raw materials affect your production?
  • Do suppliers in the sector have a monopoly?
  • Is the demand for your product seasonal?

What's this about?

This part of the market research is indispensable to the success of your project.

It's also called financial forecast.

It comes from your business strategy that you defined in your market study.

These are documents in the form of encrypted tables.

The financial forecast shall consist of 4 parts :

  1. Profit and loss account (over 3 years)
  2. Forecast balance sheet
  3. Funding plan (over 3 years)
  4. Cash flow budget or cash flow plan (over 12 months)

What is the use of a financial forecast?

It's a tracking tool of your financial situation.

The data in these documents must be updates then every 6 months after you create your company.

It helps you:

  • Check whether your company is profitable or not
  • Know if your business will generate profits or not
  • Identify your financing needs
  • Apply for funding at banks
  • Negotiate with your suppliers
  • Convincing Investors

FYI  

This estimated budget will be inserted in your business plan file.

Who makes the financial forecast?

You do not need to be an accountant to initiate the construction of this document.

It is, however advisable to make you accompany

Who shall I contact

Step 1: The profit and loss account

This is a table where you record your expenses (expenditure) and your products (revenue).

After this calculation, you will be able to evaluate your result.

If your revenues are higher than your expenses, your result is a profit, otherwise it's a loss.

You must encrypt your charges.

The operating expenses are everything you need to run your company:

  • Purchase of goods and raw materials
  • Storage costs
  • General costs: rent, insurance, maintenance, etc.
  • Taxes: CET, property tax, continuing vocational training, apprenticeship tax, etc.
  • Running load: supplies, small equipment, fuel
  • Compensation of staff: salaries, social contributions
  • Life of invested equipment, i.e. the loss of value of an asset invested and spent on the activity, due to wear and tear or obsolescence

Please note

You will encounter the term depreciation charges. Depreciation is the loss of value of a fixed asset of the company due to wear and tear or obsolescence. They're also called fixed assets.

The financial charges are loan repayments.

The exceptional charges are those which do not fall within the scope of day-to-day management or normal operation. They have no impact on operating income (e.g. sale of business equipment).

Please note

You will encounter the term transferred assets or disposal of assets. For example, it is an obsolete asset or production tool that is separated for the purpose (very often) of generating cash.

You must encrypt your operating products, your turnover (CA): this is everything you sell and anything that brings you money from your business.

You enter the revenue from each of the following:

  • Sale of purchased products (for resale)
  • Sale of products made by your company
  • Sale of the realization of a service
  • Operating subsidy paid by the State or local authorities: a subsidy that helps, for example, to pay your costs for manufacturing and production, or to compensate for the lack of turnover (turnover)
  • Other income: financial (e.g. participation in other companies), exceptional (e.g. investment grant to help pay for equipment purchase)

Step 2: The forecast balance sheet

This is a table that summarizes what the company owns: its patrimony.

A company's assets and liabilities are made up of the company's assets and liabilities.

  • The asset : it is the property and rights that will be used for the functioning of the company. Examples: buildings, land, equipment, machinery, furniture, stocks.
  • Liabilities: it's the financial means that pay for your assets. It's debt and capital. Examples: your bank loans, contributions in kind (car, computer, etc.) or in money, contributions of your associates to the creation of the company or by capital increase.

Step 3: The financing plan

Ec 3e the table consists of 2 elements:

  • Your needs (BFR: titleContent, fixed assets, repayment of loans)
  • Your resources (CAF: titleContent, capital injections, current accounts, underwriting of loans)

It shows whether your project is viable.

If your resources exceed your needs, you can build up available cash. Otherwise your company will have cash flow difficulties and therefore the business will be threatened.

You must complete the forecast on 3 years to come.

2 important resources must be included:

  • The working capital requirements (BFR) : this is inventory charges, receivables, payment of your payables. To calculate them, you must evaluate the following 3 points:
    • Inventory Turnover Delay
    • Payment of customers (your receivables)
    • Payment term for your suppliers
  • The self-financing capacity (CIF) : this is your profit or loss (= your income minus your expenses) + depreciation charges (= the sum of the impairment losses of your fixed assets)

FYI  

The banks use this projected financing plan to review your loan application and calculate your loan.

Step 4: Budget or cash flow plan

Ce 4eme summary table month by month your receipts and your outflow of money.

These are transactions in the company's bank account.

We also call him a monthly cash flow statement.

Cash receipts are called cash receipts.

Exits are disbursements.

You need to know the different payment periods to enter the amounts in the appropriate month.

Warning  

certain tax payments (VAT, social security contributions, business taxes, etc.) are paid in advance with annual balances. You need to know the payment date of the deposit and the balance.