BR Newsletter May 27, 2002 Vol 5 No 5

THE BUSINESS RESEARCHER NEWSLETTER ARCHIVES ----------------------------------------------------------------------- May 27, 2002 Volume 5, Number 5 CONTENTS * Introduction - Editor's Comments * What's New at www.gdsourcing.com * Statistics Canada releases * Does Your Market Research Identify Your Market? * Small Business Stats Facts For data table spacing, this newsletter is best viewed in Courier 10 RETURN TO ARCHIVES ----------------------------------------------------------------------- NB: This newsletter is sent out only to those who have requested it. If someone has submitted your e-mail address to us without your permission, please send us an e-mail indicating you would like to unsubscribe at: [email protected] or use our on-line form to unsubscribe yourself at www.gdsourcing.com/newsletter.htm ----------------------------------------------------------------------- INTRODUCTION - EDITOR'S COMMENTS Hello, 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 better. 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. Sincerely, John White Editor RETURN TO TABLE OF CONTENTS ----------------------------------------------------------------------- WHAT'S NEW AT www.GDSOURCING.COM - NEW HOMES, NEW CARS, WIND & HEARING The following web sites were added to the GDSourcing index over the last four weeks. GDSourcing is a reference point for free Canadian statistics on-line. CANADIAN HOME BUILDERS ASSOCIATION Site: http://www.chba.ca/ GDSourcing Site Summary: http://www.gdsourcing.com/works/CHBA.htm Data related to new home construction in Canada. DESROSIERS AUTOMOTIVE CONSULTANTS Site: http://www.desrosiers.ca/ GDSourcing Site Summary: http://www.gdsourcing.com/works/DesRosiers.htm Data related to new car sales in Canada. CANADIAN HEARING SOCIETY Site: http://www.chs.ca/ GDSourcing Site Summary: http://www.gdsourcing.com/works/Hearing.htm Survey to determine the prevalence of and attitudes about hearing loss and deafness in Canadian society. CANADIAN WIND ENERGY ASSOCIATION Site: http://www.canwea.ca/ GDSourcing Site Summary: http://www.gdsourcing.com/works/Wind.htm Wind power production in Canada RETURN TO TABLE OF CONTENTS ---------------------------------------------------------------------- STATISTICS CANADA RELEASES 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: http://www.gdsourcing.com/works/StatCan.htm 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 [email protected]. Put "StatsCan" in the subject line of your e-mail. We have identified below which releases have a FREE publication associated with them. AGRICULTURE 2001 Census of Agriculture - Canadian farm operations in the 21st century http://www.statcan.ca/Daily/English/020515/td020515.htm Production of poultry and eggs 2001 http://www.statcan.ca/Daily/English/020516/d020516g.htm Seasonal variation in rural employment http://www.statcan.ca/Daily/English/020424/b020424a.htm Production and value of wildlife pelts 1999 (revised) and 2000 (preliminary) http://www.statcan.ca/Daily/English/020425/d020425l.htm Red meat consumption 2001 http://www.statcan.ca/Daily/English/020425/d020425k.htm Farm Input Price Index 2001 (preliminary) http://www.statcan.ca/Daily/English/020516/d020516h.htm Greenhouse, sod and nursery industries 2001 http://www.statcan.ca/Daily/English/020426/d020426g.htm BUSINESS SERVICES Employer pension plans (trusteed pension funds) 2000 biennial census http://www.statcan.ca/Daily/English/020510/d020510e.htm COMPUTER Working smarter: The skill bias of computer technologies 1999 http://www.statcan.ca/Daily/English/020506/d020506b.htm ECONOMIC INDICATORS Financial performance indicators for Canadian business 2000 medium-sized and large businesses in Canada http://www.statcan.ca/Daily/English/020425/b020425a.htm EDUCATION Childcare services industry 1999 http://www.statcan.ca/Daily/English/020426/d020426a.htm Part-time university faculty 1990/91 to 1997/98 (final) http://www.statcan.ca/Daily/English/020508/d020508b.htm ENERGY & ENVIRONMENT Electric power generation, transmission and distribution 2000 http://www.statcan.ca/Daily/English/020502/d020502e.htm Environment industry: business sector 2000 (preliminary) http://www.statcan.ca/Daily/English/020425/d020425c.htm Waste management industry: government and business sectors 2000 (preliminary) http://www.statcan.ca/Daily/English/020425/d020425b.htm Energy conservation and environmental management practices in businesses 1998 (preliminary) http://www.statcan.ca/Daily/English/020425/d020425m.htm HEALTH Canadian Community Health Survey: A first look 2000/01 http://www.statcan.ca/Daily/English/020508/d020508a.htm Deaths 1999 http://www.statcan.ca/Daily/English/020507/d020507b.htm Stillbirths 1999 http://www.statcan.ca/Daily/English/020507/d020507c.htm JUSTICE SERVICES Courts personnel and expenditures 2000/01 http://www.statcan.ca/Daily/English/020516/d020516i.htm Legal aid 2000/01 http://www.statcan.ca/Daily/English/020524/d020524c.htm MANUFACTURING The trend to smaller producers in manufacturing: A Canada/U.S. comparison http://www.statcan.ca/Daily/English/020523/d020523d.htm MARKET Wives, mothers and wages: Does timing matter? 1998 http://www.statcan.ca/Daily/English/020501/d020501a.htm SMALL BUSINESS Financing innovation in successful small firms http://www.statcan.ca/Daily/English/020524/d020524d.htm TRADE Foreign affiliate trade statistics 1999 http://www.statcan.ca/Daily/English/020424/d020424g.htm RETURN TO TABLE OF CONTENTS -------------------------------------------------------------------- DOES YOUR MARKET RESEARCH IDENTIFY YOUR MARKET? 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 possible. 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 BUT WAIT. 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 http://www.gdsourcing.com/CMEinfo.htm) 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 itself. RETURN TO TABLE OF CONTENTS ---------------------------------------------------------------------- SMALL BUSINESS STATS FACTS 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) RETURN TO TABLE OF CONTENTS ----------------------------------------------------------------------- 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 * www.gdsourcing.com * [email protected] * ----------------------------------------------------------------------- Copyright 2000, 2001, 2002 GDSourcing - Research & Retrieval. All rights reserved. You may circulate this newsletter freely as long as GDSourcing is clearly credited as the source. We encourage people to subscribe directly. There is no charge for this newsletter. A subscription and unsubscription form is available at http://www.gdsourcing.com/newsletter.htm