Beth Plutchak Consulting LLC

Potential clients often ask me—“Well, isn’t it all free on the internet?” The answer, of course, is yes and no. There is a great deal of free information out there, if you know where to look and how to interpret it. In the interest of letting you know what is indeed “out there” here are some free tools to get you started.

Six Free Tools and an IPAD app

1. Search prospects on MANTA

If you can’t afford Dun & Bradstreet for prospect lists give MANTA a try. Manta is a free tool that accesses many of the same data sources as Dun & Bradstreet and Hoover’s. It has access to information on both closely held and publicly traded companies, just type in your criteria or search by company name and you are good to go. The downside is that you can’t print the lists you pull. But, it is a nice tool to begin building your own prospect list. You can claim your own company on MANTA and make sure your own information is being accurately reported.

2. Use Linked-In Search for prospecting

Linked-In has a search option which can be used to  identify contact people within an organization. Go to the search tab and choose company, then hit the search button without entering a company name. Detailed search will show up on the left of the screen. Enter parameters and you will get a list of companies that meet the selected parameters. Zero in on a company and you will get a list of their employees who are on Linked-In, both inside and outside your network.

3. Census Data

U.S. Census Data is available online, at the American Fact Finder. This is the official source for U.S. Census Data on populations, communities and economic trends. Tutorials in how to download the tables and access the information are available at the site.

4. ESRI Tapestry/Market Segmentation

ESRI collects demographic, lifestyle segmentation, consumer spending, and business data for profiling customers, analyzing markets, evaluating competitors and identifying opportunities. Although, there is a fee for software and reports, the Tapestry Segmentation page gives a unique perspective on the characteristics of a population in any U.S. zip code. Just type in the zip code and you will get some interesting demographics on that area as well as the top three lifestyle segmentation categories.

5. There’s no such thing as a free lunch, except when there is.

Freelunch.com is an excellent source if you want to get your feet wet in economic trend reporting. They have a number of free data series which you can view or download into Excel. This is general data used to identify trends, such as changes in unemployment by zip code. Their free data is pulled from other free sources, but it is nice to have them all in one place.

6. City Forward/Cloud based research

City Forward is another trend analysis tool that uses free data government data. Searches, called Explorations, are saved so that you can begin your search by building from what other members of the City Forward community have created. This is a good example of a tool that is traditionally used by city managers and Economic Development professionals, but has great potential for small business.

And last but not least, Wisdom for the Ipad

This is another crowd sourced application that pulls from the massive amounts of data that Facebook has collected. You can filter the data by a number of demographic and psychographic keys for customer analysis. The data is confined to data collected from FB, rather than the general population, but with close to 900,000 million FB users it is a robust source.

So there you have it. My top seven go to choices for doing business research for free on the internet. All it costs is your time.

beth plutchak consulting llc
business intelligence for the rest of us

The Big Five of Demographics

You are probably familiar with the big five of demographic data: income, education, age, gender and race. The Census Bureau collects this data and makes it available by census tract. But, what if you have individuals with identical demographic stats who have very different buying habits? For instance, I live in a rural community, not far from Madison, WI. A woman who has my demographic characteristics, but lives on Madison’s Isthmus will have very different spending patterns than I do. Our different interests are evident in where we choose to live. In the Era of Big Data, companies are using psychographic data to dig deeper into spending patterns.

A few years ago my sister-in-law became a part owner of a Gymboree Play and Music franchise. The parent company offers demographic research to their franchisees, among other supports. Lynn and her partner flew out to California for training. They were given site selection help for opening their Alabama location.

Gymboree had quite a few locations in California, but few in the Southern United States, at the time. The new franchisees were given demographic information based on what had been successful for California franchises. Lynn and her partner located in a suburb with married couples of an age likely to have young children.

Customer Research—Demographics Alone Are Not Enough

Demographics suggested that the higher the income and education of the parents, the more likely they were to spend disposable income on enrichment classes for their children. Since this is not a day care or a preschool, at least one parent needed to have enough leisure time to transport their child and wait for the classes to end.

In early 2010 sales for the Alabama franchise were not what they’d hoped, but the new franchisees did not blame it on the poor economy, they took a closer look at their customers. When their lease was up they moved location, based on experiences which did not match the parent company’s assumptions.

They found they had a large number of Hispanic clients whose demographics on income were lower than their original target. It turns out that parents in the nearby Hispanic neighborhood place a high value on family, children and enrichment. They were likely to spend more of their disposable income on children’s enrichment than neighboring non-Hispanic parents.

It would be a mistake to think that simply adding a demographic search by ethnic identity would tell the whole story. According the Hispanic Chamber of Commerce there are over twenty different countries and sub-cultures represented in Spanish speaking communities. Lynn and her partner needed to understand their core customers. Demographics alone are not enough.

Data Research Tools

One of the tools I use is the Tapestry Data tool supplied by ESRI. According to their website: “Tapestry classifies U.S. residential neighborhoods into 65 unique market segments based on socioeconomic and demographic characteristics.” For my customers, I am able to put together reports and GIS maps which give a clear picture of actual customer spending patterns. This information can be used for site selection and marketing, by companies that are not big enough to collect this kind of robust data on their existing customers. It can also be cross-checked with existing company data, to give an edge that helps with decision making. Play around with their free tool, which gives you a snapshot of what Tapestry results are for any zip code.

How well do you know your customers? What additional information would give you the competitive edge?

McKinsey & Company and the New York Times have declared this the era of big data, but don’t think Big Data is only for Big Companies.

Here are four questions even small to mid-size companies can get answers to:

1. How well do you know your customers?

You may think your customers are local, but there are a couple of quick tests you can use to determine where your customers actually come from. If you do not have a point of sale mechanism to collect this data, you can do your own test by asking customers to share their home zip code when they shop. When our local hospital did a zip code test and had a GIS map run on the results they were surprised to find that they had a number of people who came from the northern counties in the state, bypassing a more conveniently located hospital in Wausau and a large medical center in Madison. This opened up opportunities to take a closer look at their specialties and their marketing strategy.

2. How well do you know your competitors?

Most Business Owners have a good idea of who they are losing sales to. What they may not know is why. It is easy to make an assumption that you are losing on price, but solid competitor research can determine if that is true. It can also identify the niche areas where you can focus and protect your pricing. Recently a local retailer saw a large sporting goods chain enter their market. Not only was this competitor able to offer many of the same products at a cheaper price, they would be able to sustain that price for a longer period of time. A competitor analysis was able to show where the big players saw their largest margin items, and what products and services they were ignoring to pursue these higher margin items. Combined with customer research, this competitor research revealed a niche area that the small retailer could enter and charge a premium.

3. How well do you know your trade area?

A good trade area analysis is specific to a company, its industry, and its geographic area. Companies thrive by being able to respond to local market conditions, particularly if they are at odds with the national picture. After the start of the Great Recession the restaurant business in general took a big hit. In Madison local restaurateurs were able to take advantage of Wisconsin’s status as an agricultural state and the presence of a strong local culinary school at Madison Area Technical College to become early entrants in the local food movement. Today Madison has a thriving Restaurant Sector which is gaining national attention.

4. What has changed for small business?

Business research used to come in two flavors, market research which was mainly for consumer companies and consisted of local surveys and focus groups, and business analytics which was a game for large companies which collected massive amounts of internal data and used expensive software and analysts to quantify. Medium sized B2B companies could also subscribe to Hoover’s databases and industry analysis from a source such as IBIS or First Research, for a costly annual fee.

Pricing for these tools have come down considerably in the last five years, and additional pricing options are available such as per report pricing or daily subscriptions. Beth Plutchak Consulting has access to a host of research tools, as well as the trained staff to use these tools and provide the analytics.

Small businesses need an edge to protect their margins and protect their pricing. Don’t think that the era of Big Data is only for Big Companies.

Share:

Some things change. Some things stay the same. Banks have traditionally asked for 20% down on real estate financing and as much as 50% down on receivables, inventory and fixtures. Prior to the 2008 recession it was easier for small business owners to come up with that 20% or more down. The chief asset small business owners have, outside of the business itself, is the equity in their homes. Since 2008 home values have plummeted wiping out that equity source for many.

An additional hurdle that small business owners have to overcome is the cash flow coverage ratio (CFC, the ratio of cash available for debt service to total debt). Banks calculate cash flow by averaging the 2 or 3 most recent year-end financial statements or tax returns. A bad year pulls that number down for the 1 or 2 years surrounding it.

Five Things You Need to Know to Secure Bank Financing Today

1. Cash Flow Coverage

Find out how your bank calculates Cash Flow Coverage (CFC). If they average three years of statements, ask what it would take to get CFC calculated on two years, instead. Usually, whether the bank asks for two or three years of statements depends on the amount of financing requested. If you can get by with a smaller loan amount, you may be able to show better CFC.

Some banks are now calculating based on a rolling year, rather than a fiscal year. This means that they will calculate CFC backwards from the date you apply for a loan, rather than the last fiscal year-end. This can work to your advantage, particularly if 2009 was your worst year and you’ve improved since. It may be worth the expense to get accountant prepared interim statements.

If you have a family business or multiple businesses, the bank may be able to add in other income sources when calculating CFC. Make sure you are giving your banker complete information.

2. Collateral Coverage.

The collateral value of your business property may have fallen, as well as the collateral value of your personal property. In the New Economy you may have to cross-collateralize some assets that you had been able to keep separate in the past. You may have to pledge personal assets that you haven’t pledged in the past. This is not likely to change any time soon.

 3. Cash flow vs equity lending.

In the past, community banks often relied more heavily on equity and overlooked problems in cash flow. This contributed to small business failures when asset values plummeted. All banks are taking a harder look at CFC now. If you can show improving cash flow, your bank may be able to help you with a guarantee program that compensates for other weaknesses.

 4. Nobody likes surprises.

 If you have problems that show on your personal credit bureau, let the banker know before credit bureaus are pulled. If the circumstances that caused the problem were outside your control or have changed significantly, you may still be a good credit risk from the bank’s point of view. Commercial underwriting is not tied to personal credit scores the way personal underwriting is and special circumstances can be taken into account. If the banker sees an adverse condition or warning on your credit bureau that she wasn’t warned about, she may wonder if you are trying to hide something.

 5. Some things remain outside your control a/k/a the regulatory environment.

Different banks have different regulatory constraints. In Wisconsin there are at least three different agencies that might govern your bank: Comptroller of the Currency, FDIC or State Department of Financial Institutions. Even when governed by the same agency, banks are subject to different rules depending on asset size and capitalization. If you are told you don’t qualify for funding because of changes in bank regulations, you may not get the same answer from the next bank down the road. You can check out bank ratings from numerous sources on the internet. The more sound the bank, the less likely they are to be under certain lending constraints.

Feel free to share your questions and experiences in the comments.

Share: