Small business needs to embrace Big Data not just to survive, but to thrive. It can be intimidating.
Big Data is a term we hear often and yet it is not easily defined. There is nothing tangible that we can put our hands on. It's a concept and a service and an opportunity. The challenge is identifying how we can leverage Big Data and capitalize on it with limited resources.
As a small business you must manage risk with limited resources. Teams are small and are unlikely to have a Big Data expert on staff. The following are several concepts to understand and engage if you have a small business and are exploring Big Data:
29% of small businesses use a Customer Relationship Management (CRM) system according to Inc. Magazine (Small Business Trends for Fall 2015).
That is astounding when you consider the inverse; 71% of small businesses do not use a CRM system. You can then infer two things; that small business moves slow technologically and that small business does not hold consumer data in high (enough) regard.
With most small businesses, the owner and team actively engage with customers and intuitively know their customer base. It is true that businesses can be agile and accurate without deeply integrating data collection and analysis into their operations.
However, small business is at risk of significant opportunity costs. In other words, what opportunity might a small business miss because they focused their energies elsewhere, aside from Big Data?
One key factor relates to who has this deep, intuitive customer understanding. It is common for a business owner or manager to be involved enough to assimilate into their customers' lives. Perhaps key employees with long tenures do the same.
But the majority of employees, non-customer facing staff and new hires lack this integration. The opportunity to help them understand and engage with their audience, the prospective and current consumers, can be monumental in the growth of a business. Big Data allows that.
Small business has reason to be wary of Big Data. Several factors must be considered before diving into what can be a high risk, high reward situation. These risks and barriers fall into three main categories: financial costs, intellectual capital and again, opportunity costs.
Financially, small businesses tend to be cash strapped. To survive and thrive, cash flow management is of the utmost importance. Deciding how Big Data investment fits into cash flow management is difficult if the outcome, return on investment and return on objective isn't clear.
Fortunately, we are in fast-paced times with new companies and services arising every month. That means small business has the opportunity to leverage an affordable service, provided they can find the resource in the first place. One of the greatest needs for small business is a Big Data sage to guide them through the unclear waters.
Intellectual capital refers to this need of having a Big Data expert to lead the charge. With Big Data as such an ethereal and modern solution, we need expertise. Yet, as a small business, resources are limited, especially with one of the greatest costs associated with business — human capital.
The result is difficulty in sourcing affordable in-house staff to manage such initiatives. Additionally, it can be difficult to keep employees engaged enough with the promises of Big Data to find an outside expert, due to its lack of clarity and tangible benefits.
Opportunities may be high with Big Data, but it can just as well become a distraction. Mismanaged priorities and energies lead to overextension into Big Data research, planning and execution. To the same point, one may not give sufficient efforts to the search of Big Data. You do need to consider the time implications of such endeavors.
Buying cycles of consumers; market analytics of best, average and low-value customers; and deciphering ideal market segments all fall within the data category.
The opportunity is in being able to identify what key information can be leveraged, how to extract that information and how to leverage it. This is a multi-pronged approach to execution and each step is vital.
Moving away from "historical and intuitive data", hard data provides the means of unbiased, non-emotionally driven decision making. It removes blame on any individual for decisions that may not be widely popular.
There's a new leader in town and that is Big Data. As long as a business owner can embrace letting go of some control (relieving some burden from their own shoulders) the opportunities within Big Data are abundant.