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May 27, 2002 Volume 5, Number 5


Introduction - Editor's Comments

* What's New at

* Statistics Canada releases

* Does Your Market Research Identify Your Market?

* Small Business Stats Facts

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We have had a lot of inquiries about when the 2002 issue of Researching a
Small Business will be released.  This year's issue has been delayed
because we have been consulting with business development centres, public
libraries, entrepreneurs and business advisors on how to make the guide

The results of our research our now complete.  The 6th edition will be
released in August of this year.  It will be available in a number of
formats (paper, CD-ROM, Internet download and subscription database.)   The
database will be updated weekly while semi-annual updates for the paper and
CD-ROM versions will be sold separately.  This edition will be bigger still
and include some new data sets that enhance the usefulness of the guide
even more.

I will let you know when we have a firm release date in August.

I hope you find this issue helpful.


John White




The following web sites were added to the GDSourcing index over the last
four weeks.  GDSourcing is a reference point for free Canadian statistics

GDSourcing Site Summary:

Data related to new home construction in Canada.

GDSourcing Site Summary:

Data related to new car sales in Canada.

GDSourcing Site Summary:

Survey to determine the prevalence of and attitudes about hearing loss and
deafness in Canadian society.

GDSourcing Site Summary:

Wind power production in Canada





The following statistics were release by Statistics Canada over the last
four weeks.  We have listed those releases we feel are of the most interest
to Canadian entrepreneurs. 

Very few of these statistics are available on-line.  The URL listed is a
direct link to the press release associated with the data.  It provides
contact and ordering information.

If you want to purchase any publication related to these releases please
see our web site:

We offer a 20% discount on most Stats Can publications and a 10% discount
on Stats Can electronic products.  For more information you can reach us at  Put "StatsCan" in the subject line of your e-mail.

We have identified below which releases have a FREE publication associated
with them.


2001 Census of Agriculture - Canadian farm operations in the 21st century

Production of poultry and eggs 2001

Seasonal variation in rural employment

Production and value of wildlife pelts 1999 (revised) and 2000 (preliminary)

Red meat consumption 2001

Farm Input Price Index 2001 (preliminary)

Greenhouse, sod and nursery industries 2001


Employer pension plans (trusteed pension funds) 2000 biennial census


Working smarter: The skill bias of computer technologies 1999


Financial performance indicators for Canadian business 2000
medium-sized and large businesses in Canada


Childcare services industry 1999

Part-time university faculty 1990/91 to 1997/98 (final)


Electric power generation, transmission and distribution 2000

Environment industry: business sector 2000 (preliminary)

Waste management industry: government and business sectors
2000 (preliminary)

Energy conservation and environmental management practices in businesses
1998 (preliminary)


Canadian Community Health Survey: A first look 2000/01

Deaths 1999

Stillbirths 1999


Courts personnel and expenditures 2000/01

Legal aid 2000/01


The trend to smaller producers in manufacturing: A Canada/U.S. comparison


Wives, mothers and wages: Does timing matter? 1998


Financing innovation in successful small firms


Foreign affiliate trade statistics 1999





For market research to be effective it must identify the size and nature of
your best target market.  A small business cannot spend years before seeing
a profit.  It must generate revenue and a consequent profit as soon as

To do this you must actively pursue those clients or customers that will
immediately recognize the benefit of your product/service.  This "target"
market does not need a sales pitch.  As soon as they are aware of your
product/service they will act.

Many new entrepreneurs consider their entire potential market as their
"target" market.  The most frequent "target" markets cited are "small and
medium size businesses" and "wealthy households".  Neither of these market
groupings can be considered real "target" markets.  The are both massive in
size and full of diverse and distinct sub-sectors. 

For example while many economists talk of the small business market most
small business owners consider themselves first and foremost as part of
their industry.  

An owner of a florist shop considers himself a florist first, a small
retailer second and as a small business owner third.    If a company
approaches him with a business service that is specific to florist shops,
he is going to be much more interested than if someone approaches him with
a service designed for "small businesses".    The company that identifies
itself as a specialist for florists gains instant credibility within this
subsector of the small business market.

Rather than use their market research to identify the best market - i.e.
that market where they can make the quickest sales - many new entrepreneurs
use it to describe every possible customer who might one day be interested
in their product.  While this type of shotgun approach creates an
impressive market profile (both in size and depth) it does nothing towards
ensuring that a business will survive those crucial first three years of
business when half of all new Canadian businesses fail. 

The most dangerous aspect of this type of market profile is that it gives
an entrepreneur an inflated expectation of market share potential.   From
our experience in helping new entrepreneurs, the greatest problem most
micro businesses face in the first year of business is a lack of sales and
yet prior to starting their business many of these owners feel their
greatest challenge will be in meeting overwhelming market demands. While
enthusiasm and optimism are key to entrepreneurial success, unfounded hope
is not. 

To talk of significant expansion plans at the end of the first year of
operation is reckless.  While an overheated marketplace can pose potential
problems for a business, it is not an issue that many new businesses face,
especially in the first 12 months of operation.   You are much wiser to
concentrate your market research on determining how you can make easy sales
rather than identifying everyone who might buy your product/service and
expecting that they will.

For example, if you are setting up a child care centrein Uxbridge Ontario,
you might try to assess your market size by determining the number of
children under ten in your target market.  According to the Financial Post
"Canadian Markets" publication, there are 2396 children under the age of
ten in Uxbridge, Ontario. 

A careless entrepreneur might estimate from that figure that there are 2396
potential customers in the market.    If she figures all she needs is 60
full & parttime children to be profitable, she might begin worrying about
waiting lists and screening tests, after all her market appears to be 40
times the size of her classroom.  Given such "potential", staffing issues
and space limitations may be considered an issue even before start-up


To more accurately determine market potential we have to recognize the fact
that just because a child is under ten does not mean that they will attend
daycare.  In fact according to the 2000 Survey of Household Spending only
7.3% of all households in the GTA (of which Uxbridge is a part) use out of
home childcare.    Another 6.1% use some sort of in-home care and the
remaining 86.6% of households do not pay for any childcare at all.

Given that there are 6688 households in Uxbridge, this means that the
existing market is approximately 488 households (6688 x 7.3%).  This figure
is substantially less than the original 2396 estimate, however this gives a
much more realistic picture of the actual marketplace. 

Of course we will also need to consider the number of competitors already
active and the number of families each of them serves before we can fully
anticipate market potential.  It is clear though that the original market
size estimate dramatically altered market perception and essentially
encouraged unfounded expectations.

(For more information on Household Spending data see

While a global figure (such as the number of children under ten)
establishes a market framework, you must relentlessly drill down until you
arrive at your best "target" market.

GDSourcing provides research services to small businesses and new
entrepreneurs.   In Dec 2001, there were 2.1 million small businesses in
Canada (less than 50 employees, including businesses without any
employees).  Our services would be useful to anyone of these businesses but
in reality our target market is much smaller.

First of all, GDSourcing is an Internet-based business.  That means we are
virtually invisible to any small business that is not online.  By
consulting a variety of sources, both government and private sector we have
determined that only 39% of these smallest of small businesses are actually
online.  That means our market is already cut to 819,000. 

We also have to consider that just because a business is online does not
mean that they are conducting research there.  In fact only 83% of small
businesses online use the Internet for research.  This brings our target
market down to 680,000. 

Now just because someone is doing research online does not mean that they
will pay for data or hire someone to do it for them.  In fact studies show
only half of Canadian small businesses conducting research online are
willing to spend money on research.  This means our target market is pared
down even further to 340,000. 

Of this group, our best target market is businesses that have recently
started operations.  Many of these need to complete a business plan for
financing or government support.   Approximately 8.0% or 27,000 of the
remaining businesses are less than a year old. 

By actively pursuing the size of our best market, we discovered that our
target market (our easiest sales) represents only 1.2% of the small
business sector.  While this figure is substantially less than the overall
small business market, it provides a realistic estimate that can be used
for planning and forecasting. 

Each year we revisit our own market research to assess other best markets
and to benchmark our previous year's performance and market penetration.
This helps us to identify where and how to expand and where we should hold
off until the "best" market grows in size (e.g. services for new
entrepreneurs that require high speed Internet access).

Market research should not be a "feel good" exercise that totals up all the
customers that will, should and might buy your product/service some day in
the future.  It's sole purpose is to identify the easiest way to make
money.  Target your most avid purchasers and let your product/service sell




Each Business Researcher Newsletter ends with a collection of five
statistics that every entrepreneur should be aware of. 

1. Canadian entrepreneurs were asked, "How do you think the Canadian
economy will perform in the next 12 months?"

. Very poorly 5%
. Fairly poorly 20%
. Fairly well 64%
. Very well 11%
Source: Profit Magazine (May 2002)

2. Canadian entrepreneurs were asked "What are the most serious issues
facing Canadian entrepreneurs today."

. Taxes 70%
. Banks' lending policies 48%
. Government regulation 43%
. Shortage of skilled labor 39%
. The low dollar 36%
. Weak U.S. economy 30%
. Turbulent stock market 25%
. Scarcity of investment capital 23%
Source: Profit Magazine (May 2002)

3. Canadian entrepreneurs were asked, "Which of the following do you expect
to do over the next 12 months?"

. Hire new employees 59%
. Introduce new products or services 57%
. Invest in new capital equipment 48%
. Take a business-related course 36%
. Open a new office, branch or plant 23%
. Raise capital for expansion 23%
. Reduce your payroll 16%
. Export to a country you've never sold to before 9%
. Apply for a government grant 9%

Source: Profit Magazine (May 2002)

4. Canadian entrepreneurs were asked, "In which of the following areas will
the Internet play a major role in your company's future?"

. Marketing 52%
. Reaching new customers 43%
. Internal communication 41%
. Customer-relationship management 34%
. None of the above 25%
. Purchasing 20%
. Online sales 16%
. Cutting costs 14%
. Recruiting staff 14%

 Source: Profit Magazine (May 2002)

5. Canadian entrepreneurs were asked, "What would you tell a young
entrepreneur planning to start a new business in Canada today?"

. Forget it 11%
. Wait a year 5%
. Sure, but don't quit your day job 23%
. Go for it! 59%

Source: Profit Magazine (May 2002)


G D S O U R C I N G - R E S E A R C H  &  R E T R I E V A L
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UPDATED: 08/06/03
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