Photo (CC) Justin Grimes, on Flickr

A lot has been written about how market research will help you achieve business success, and many of these claims are true.

That connection, however, is not a simple, direct link. Collecting information about your potential market is useful only if you take the next step of analyzing the data.

Data analysis yields clues about who your customers are, what they are buying and problems they face. It provides you with an insight of the benefits they are seeking.

Data analysis begins before you even start collecting the information. Thinking about the questions you want answered. This guides the data you need to collect. Remember to start with data you already may have:

• Customer lists – Do the lists answer how much customers spend, when they buy and what they buy?
• Effectiveness of your marketing – Are your customers responding to your marketing and advertising efforts? If so, what efforts are working best?

Your local chamber of commerce or economic development office will also have information about the trade area and the people who live there.

You also can get information from third-party sources. Trade journals, news magazines and papers, plus writers you find online or in books, often share information about your target market.

Finally, vast amounts of data are available for free from the state and federal government. Here in North Dakota, you might check out ND Compass and the U.S. Census Bureau. Both of these are adding tools to make data analysis easier for anyone.

After having examine the information available, then look for the gaps. Make plans to fill those gaps.

Tools to help collect such information include surveys (paper, oral or electronic); contests structured to provide feedback information; checkout data, such as asking a question or two as a person is checking out; and customer feedback. Data also can come from observation, interviews or simple testing. Data collection can be done one-on-one, in a group or through the mail.

But to this point, your data is just numbers and words. The return for your effort comes from making sense of the information. You can use in-depth statistical packages or textual analysis software. Many business owners start by putting numbers into a spreadsheet and looking at frequencies, charts and graphs. The idea is to see if any trends emerge. The same goes for textual information.

Having others look at your initial findings is helpful. This is a good time to have your mentors and advisers review the information and have some frank conversations about what everyone is seeing. Different interpretations will emerge, giving you greater insight. If you can supplement the numbers with customer conversations, then your analysis will yield even more.

It sounds complicated, but it’s really not. Start simple and build your skills and your database. You don’t have to collect everything at once.

When doing market research, balance what you need with the cost and time required to get it. Don’t forget to take into account your customers’ perspective, how much time are they willing to give and what information might they want to keep private.

Building your business means knowing your customers. Good market research can help you know your customers, so start your effort today.

Photo (CC) Justin Grimes, on Flickr

Yet small-business owners often are not sure if and how big data fits into their business. Nor do they know where to get it and how to analyze it, even if they would have it.

Small-business owners need not be scared of the term “big data.” It simply means information of a size that you cannot analyze it by hand. You need to use some type of computerized tool to help out.

But business owners need to remember that data is one key when making decisions.

This is the point at which business owners get nervous. They don’t want to spend a lot of money or hire someone to help them get this done. But they need to stop and think about the realities of the situation.

The first reality is they probably already have the data in the form of sales receipts, inventory, purchasing information and the overall financial records of the business. All of this probably already is stored electronically. Second, they already are “mining” the data when they do their profit and loss statement, cash flow reports, balance sheets, and year-end taxes and reports.

However, business owners have much more they can do with their existing data, just as other data is available for them to tap into or that they could gather relatively easily. The Census Bureau offers huge amounts of data on the demographics of an area. And the Census Bureau even put a tool, American Fact Finder, online to help with the analysis.

Other tools also are available to use in analyzing data, starting with one many people are familiar with already: the spreadsheet program.

In addition to the census data, many specialized databases are available, and they often have their own analysis tools or reports that already have been created and you just need to decide what you want. In North Dakota, one such tool is North Dakota Compass, at ndcompass.org.

Want more data? Then check out the U.S. Small Business Administration. Search for data resources. Or visit your local library or your banker. They can help you obtain information such as key ratios for others in your industry.

And, finally, you can, and should, gather your own data. That includes information you should know, such as where customers come from, what they buy, what they want, how they rate your company, what they mean in terms of dollars spent and how they found your business.

Yet data and data mining also require a cautionary note. Businesses owners may wish to avoid that data-driven approach at certain times. One example is if costs of data mining are too high. A second is when time is too short for you to use the data to reach a decision. Another time might be when you already have made the decision and you aren’t changing your mind, no matter what the data say.

Finally, you must understand that one data point or one metric (measure of a business or organization’s activities and performance) does not portray the entire picture. Your company has a mission based on a vision. Those elements offer you a guide, and you must remain true to that goal.

Data can be a great thing. You probably already have it, along with some analysis tools. And more of both are available at no or low cost.

Remember, though, that data does not, nor should it, answer all the questions. Listen to your internal compass and let data simply be a part of the guide.