In today’s world of digitization, the incorporation of analytics into businesses has become more and more prevalent to stay competitive in an industry. Businesses are taking advantage of big data and business analytics tools to better market their product and services. Analytics provide personalized services and advertisements, among many other advantages, all of which is available through analyzing customers’ data. However, most of businesses benefiting from big data and analytic tools are large firms. Are small businesses taking advantage of available data and tools as much? Are small businesses able to collect customers and products data as much as larger businesses? Are small businesses aware of what available massive data and analytical capabilities can provide them?
Small businesses can collect data to identify trends in the market. These trends come from their customers’ transactional data to identify patterns in shopping behaviors. Social media tools such as Facebook and Instagram enable businesses to connect to their customers and receive feedback on what products and services are more desirable to customers. Many other tools, in addition to social media, can be utilized by businesses to both collect and analyze data. The results of such analyses can help businesses in many dimensions improve their operational efficiencies for marketing and increasing sales. The question to be addressed though is how much a small business needs to be concerned about deploying data and analytics in their business. For example, does a popular local restaurant need to track customers’ interest on their menu? Does a local wealth management office need to understand their customers’ preferences and personalize their services?
The advantage of small businesses is their loyal local customers. Their success shows they understand their customers and can make them happy; therefore, they may not be interested in developing any analytics solution. However, the competition in the market means businesses need to be dynamic in understanding changes and consumer behavior. For instance, local retail stores feel threatened by online retailers. Collecting data from customers and market is necessary to survive in such a competitive environment. Moreover, some small businesses can be data-oriented, making data and analytics necessary for their operations. A marketing firm, for example, cannot perform nowadays without collecting and analyzing relevant data. In some other cases, the older, well-established small businesses tend to be stuck in the old way of doing business and data collection along with analytics can improve the efficiencies and automation of their operations.
Research shows most small businesses collect data. However, often the data is not structured or not organized to be of any value to businesses. If the data is usable and properly structured, small businesses then begin to understand what tools can be utilized to analyze their data. Some existing popular tools are Google Analytics, Amazon Web Services, social media marketing tools such Facebook and Instagram or email marketing tools such as MailChimp or iContact. These tools are often drag-and-drop tools providing business insights through interactive dashboards and visualizations of data. Some businesses deploy other tools such as Salesforce or custom point of sales systems to collect and process their businesses’ data. In addition, businesses can develop in-house analytical solutions by using their own expertise to utilize tools such as Excel or Tableau. The important issue in all these cases is small businesses’ awareness of analytical tools and their expertise. Information technology and analytics add new capabilities to small businesses to better gauge and improve their return on investment, utilizations rate and forecasting sales.
Small businesses adoption of information technology and analytics varies based on many factors such as their size, sector, and long-term strategies. Small businesses have fewer resources available compared to larger businesses. Lack of skilled workers, lack of time and limited financial sources are major issues which prevent small businesses from adventuring into the prosperous world of big data and analytics. A variety of support systems can help small businesses in deploying data and analytics. For instance, business incubators can provide help to startup businesses. Local chambers of commerce and industry associations can also be sources of education and increased awareness for more established small businesses. They can serve as centers for small businesses to share their experiences and provide consulting resources on how to navigate the existing analytical tools and identify the most suitable information system for their specific needs, all while remaining financially viable. Financial supports such as tax breaks from local governments can also help small businesses bear the initial cost of investment on technology and set up information systems that allow utilizing analytics.
The availability and utilization of data and analytics are going to be ubiquitous for all businesses. This is a direction that businesses will eventually have to undertake sooner than later, and all different supports are needed to help them in this endeavor.
Narges Kasiri is an associate professor of business analytics in the school of business at Ithaca College. Cameron Narimanian is a senior business administration major at Ithaca College studying marketing and management and is assisting Professor Narges Kasiri’s research in small businesses.