Posts Tagged ‘small business’

“Big Data” Benefits Small Businesses Too

May 8, 2014

(This post appeared on our successor blog, The Analysights Data Mine, on Monday, May 5, 2014).

One misconception about “big data” is that it is only for large enterprises. On its face, such a claim would sound logical; but, in reality, “big data” is just as vital to a small business as it is a major corporation. While the amount of data a small business generates is nowhere near as large as that which a large corporation might generate, a small business can still analyze that data to find insightful ways to run more efficiently.

Imagine a family restaurant in your local town. Such a restaurant may not have a loyalty card like a chain restaurant; it may not have any process by which to target customers; in fact, the restaurant may not even be computerized. But the restaurant still generates a LOT of useful data.

What is the richest source of the restaurant’s data? It’s the check on which the server records the table’s orders. If a restaurant saves these checks, the owner can tally the entrees, appetizers, and side orders that were made during a given period of time. This can help the restaurateur learn a lot of useful information, such as:

  • What entrée or entrees are most commonly sold?
  • What side dishes are most commonly ordered with a particular entrée?
  • What is the most popular entrée sold on a Friday or Saturday night?
  • How many refills does a typical table order?
  • What is the average number of patrons per table?
  • What are the busiest and slowest nights/times of the week?
  • How many tables and/or patrons come in on a particular night of the week?

Information like this can help the restaurateur estimate how many of each entrée it must prepare for on a given day; order sufficient ingredients for such entrees and menu items; forecast business volume for various nights of the week, and staff adequately.

In addition, such information can aid menu planning and upgrades. For example, the restaurant owner can use the above information to look for commonalities among the most popular items. Perhaps the most popular entrees sold each involve some prominent ingredient. In this case, the restaurant can direct its chef to test new entrees and menu items that feature that ingredient. Moreover, if particular entrees are not selling very well, maybe the restaurant owner can try to feature or promote them in some way, or discontinue the item altogether.

Also, in the age of social media, sites like Yelp and TripAdvisor can provide the restaurateur with free market research. If customers are complaining about long waits for service, the restaurateur may use that to increase staffing, provide extra training to the waitstaff. If reviewers are raving about specific menu items, the restaurateur can promote those items or create new entrees that are similar.

“Big Data” is a subjective and relative term. Data collected by a small family restaurant is usually not large enough to warrant the use of business intelligence tools such as SAS or SPSS to analyze it, but is still large enough to provide valuable insights for a small business to operate successfully.

 

******************************************************************************************************************************

Follow Analysights on Facebook and Twitter!

Now you can keep track of new posts on either Insight Central or our successor blog, The Analysights Data Mine, by simply “Liking” us on Facebook (look for Analysights), or by following @Analysights on Twitter.  Each time a new post is published, you will find out about it from either your Facebook newsfeed or your Twitter feed.  Thank you for following our blog; we also look forward to following you on Twitter as well!

Sales Forecasting: Crucial to Small Business Success

May 18, 2010

Forecasting sales is never easy, yet the ability to do so can alleviate a lot of headaches, especially for owners of small or family businesses. Small businesses have lots of the same questions large companies do: how much inventory to acquire/keep? How many workers to staff on Wednesday? How much lift in sales will each $1,000 of advertising expenditure generate? How much will sales change if we adjust the price up/down by $1? Most business owners, with all their other pressing responsibilities, have either given sales forecasting a low priority on their task list, or given up on it entirely. This is unfortunate, since an objective system of sales forecasting can greatly simplify a business owner’s planning, identify areas for improvement, and even enhance the value of his/her business. Today’s blog post explains the various benefits of having a sales forecasting system.

Simplified Planning, Reduced Planning Time

With an objective way to forecast sales, business owners can greatly reduce the time it takes them to plan for inventory purchasing and employee staffing. This is because such a system minimizes the uncertainty of tomorrow by establishing educated guesses based on historical sales. Often, decisions based on these measures are more accurate than those made with unaided judgment. A forecasting system recognizes patterns within the data, so that a business owner can make adjustments for seasonality, trends, and business cycle occurrences. For the most part, if sales on Tuesdays have been averaging $2,000 per day and sales on Wednesdays $3,000 per day, then the business owner knows to schedule more staff on Wednesdays and carry more inventory than on Tuesdays. Just knowing how sales are trending saves the business owner some valuable time.

A sales forecasting system can also help a business owner gauge the impact of seasonality. If he/she finds that sales of her product/service in July average 10% higher than baseline monthly sales, then the owner can plan more effectively for those seasonal variations.

Detection of Opportunities and Problem Areas

Forecasting systems can also alert owners of small businesses to problems and opportunities. Returning to our Tuesday/Wednesday example, the business owner may realize an opportunity to get creative with marketing. If the business is a restaurant, the owner may decide to issue coupons and advertise specials to encourage more diners to come in on Tuesdays. The reduced business on Tuesday may also alert the business owner to a problem. If Tuesday is the restaurant’s slowest day, it may be because there’s a weekly event on Tuesdays that the owner is competing against for patrons, or because the restaurant is short-staffed on Tuesdays and many potential patrons choose not to wait. There could be many reasons, but forecasting can alert the owner to the existence of a problem and the various solutions he/she could try.

Reduced Costs, Increased Revenues, Increased Employee Morale

In trying to project sales, a business owner can make two very different mistakes – under and over predicting, – each with its own undesirable consequences. Usually, these mistakes occur when the business owner’s forecasts are due largely to “gut” or other subjective means. When an owner under predicts sales, he/she may not order enough inventory or schedule enough staff. As a result, the business may run out of inventory and not be able to fulfill orders, resulting in reduced sales and lower customer satisfaction. The inadequate staffing can also increase waiting times, which also lowers customer satisfaction. When an owner over predicts sales, he/she is likely to order too much inventory and/or schedule too many workers, which results in large quantities of unsold inventory and excessive labor costs. Moreover, there are both carrying and opportunity costs associated with excessive unsold inventory. Also, inaccurate predictions can adversely affect the morale of a business’ labor force. Frequent overstaffing due to over prediction can result in bored employees, while frequent understaffing due to under prediction can lead to burned-out employees. Either way, employee morale takes a hit. With an objective forecasting system in place, small businesses can minimize the impact of both over and under prediction.

Enhanced Business Valuation

Cash flow is the lifeblood of every business, not to mention the driver of their value as going-concerns. When entrepreneurs buy existing businesses, they want to know how much cash their generating. All things equal, those businesses that generate more cash command higher sales prices than those that generate less. In the absence of an objective forecasting system, discovery of a business’ true valuation can become problematic. Buyers may demand a discount on the price of a business to compensate for the lack of sales certainty; sellers would have no concrete way to justify the price they seek. A forecasting system greatly shortens the value discovery process and makes it less cumbersome and subjective.

In addition, lenders often make decisions based on cash flows and valuation. A forecasting system can possibly increase your likelihood of getting a loan, and also the amount of funding you seek.

ForecastEase Takes the Pain Out of Forecasting

Having a system in place to forecast sales can make your business more successful and your life easier, more enjoyable, and richer. With ForecastEase, Analysights examines your sales and builds models that generate forecasts that will help you with your planning so that you can spend more time on the strategic elements of your business. Once the models are developed, we create a simulator in Excel that lets you build scenarios painlessly and effortlessly. And the models – depending on the fluctuations of the business – are durable, not needing to be updated all the time. Click here to learn more about ForecastEase or call Analysights at (847) 895-2565.

Introducing Analysights’ Small Business Solutions

May 11, 2010

I’m pleased to announce that Analysights has developed a line of solutions designed to provide high-quality marketing research services to small businesses at affordable rates. Much like large corporations, small businesses need to forecast sales, analyze and monitor their marketplace, and understand what their customers think and where improvements must be made. However, most small businesses don’t have the budget that larger ones do to get the insights they need.

Now they don’t have to!

Small businesses can now get customized marketing research services for a flat price! Analysights has introduced three lines of small business solutions: SurveySimple, ForecastEase, and PlanPro.

SurveySimple is our small scale survey solution, which includes initial consultation, questionnaire design, survey deployment, data collection for 100 to 300 responses, and analysis and reporting with recommendations. You can choose from a Silver, Gold, or Platinum package, depending on the number of people surveyed and/or the length and complexity of the questionnaire. Find out more about SurveySimple.

ForecastEase is a customized sales forecasting solution for small businesses. We use your past sales data to build a forecast model that will help you predict what sales will be in the both the short- and long-term. We then provide you with an Excel spreadsheet powered with the model, so you need only plug in a few numbers to get estimates of upcoming sales, making it easier for you to schedule employees, order supplies and inventory, and make plans with more certainty. You can have sales forecasts made on a daily, weekly, monthly, or quarterly basis. ForecastEase also has a flat price, depending on the periodic basis chosen. Find out more about ForecastEase.

PlanPro is geared towards any small business or entrepreneur preparing a business or marketing plan. The “Market Analysis” is a critical, but often difficult, section of a business plan to create. Analysights takes the drudgery of the Market Analysis section off your hands. We will consult with you and then research your market, examine industry’s trends, competition, and regulatory environment, develop projections for the next couple of years, and provide you with the findings. For a small fee, we will even write the Market Analysis section of your business plan for you. Find out more about PlanPro.

With Analysights’ Small Business Solutions, the question is no longer a matter of “can you afford to do marketing research,” but of “can you afford not to?”

Small Businesses Can’t Afford to do Marketing Research? They Can’t Afford NOT To!

September 21, 2009

How many of us would go on a road trip without first determining the optimal route to our destination?  Or locating the lodging facilities, restaurants, and service stations along the way?  Yet, why is it that when it comes to running our business, many of us don’t take the time to research the route to our business’ success?

Marketing research is a key component in developing effective marketing and business plans.  Marketing research helps us understand who our customers are, what their needs and wants are, and how they perceive our companies and our products vis a vis our compeition; marketing research also helps us ascertain how viable the market is for our products and services, the degree of competition, and the trends within our industry; and marketing research helps us establish goals and choose courses of action.

Yet many small business avoid doing any marketing research because they perceive it to be very costly.  However marketing research exists in several forms, many low cost or even free.  There are two types of marketing research data: primary and secondary.  Primary research is information you collect directly from the customer through surveys or focus groups.  Secondary research is information that has been collected and published by various organizations such as government agencies, trade publications and associations, and chambers of commerce, for various purposes.   Secondary research tends to be the least costly of the two, so it will account for the vast majority of market research a small business conducts, and most often will be all it needs.

Doing Marketing Research on a Shoestring

How can a business do marketing research on a low budget?  There are lots of great secondary research sources available, often for the nominal cost of a trip to your local library or an Internet search.  One of the best sources of marketing research data is the U.S. Census.  The Census Bureau provides demographics and population estimates, as well as social, political, and economic data.  The Census Bureau also conducts an Economic Census every five years to measure industrial activity.  The Economic Census breaks statistics down by industry and region, enabling you to size up your competition.  You can find out how many firms are in your territory, how big they are, what their revenues are, etc.  You can even find out how much of the industry’s sales are controlled by the top companies.

Besides the Census Bureau, you can find inexpensive data from your chamber of commerce, your trade associations, your vendors, and even your customers.  Check out the Encyclopedia of Associations, by Gale Research, at your library.  This source can help you identify associations relevant to your industry, as well as associations your customers might be members of.

Your public library will also have sources like The Thomas Register of American Manufacturers and the Harris InfoSource All-Industries and Manufacturing Directories, which can help you target businesses in a certain industry, learn more about competitors, and find companies to manufacture your products.

If you’re looking for company-specific information, your library may have an online subscription to Hoover’s, which is owned by Dun and Bradstreet.  In fact, D&B also furnishes its Million Dollar Database, which provides addresses, key officers, sales, and number of employees for almost 2 million U.S. and Canadian organizations, both publicly traded and privately owned.

Secondary information can also be obtained from colleges and universities, community organizations, and other government agencies.

And this list is far from comprehensive.

Given all the secondary information at our fingertips, the question is no longer whether small businesses can afford to do marketing research, but whether they can afford not to.