According to the Small Business Administration, you can ‘Combine [market research and competitive analysis] to find a competitive advantage for your small business'(source). This is important for all businesses, and allows you to find a niche that you can support.
Finding Your Competitive Advantage
First, consider your market or potential market, including the demand, market size, economic indicators, location, market saturation*, and pricing. These factors can give you some idea about whether your market can support a business.
*When you get to market saturation, it’s time to dive into competitive analysis. Consider your competition and also competition outside of your industry. If you haven’t yet, print out our guide to SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats). This can help you visualize where you might be able to find your competitive advantage.
Where can I find this information?
There are lots of data sources that can help you find the information you need for your market research. Check out the following links for data sources available to you: