Know Your Customer: Data Needed in Setting up A Business
Know Your Customer: Data Needed in Setting up A Business
When you think of putting up a business the first question to ask after you have the initial capital outlay is who will use the products I am going to sell? In short you want to know who will be your prospective customers and their socio-economic status so that you will know at the onset if you are going to be successful in your initial venture into the world of business. You cant afford to lose any investment money because times are hard and money is money. You don’t like to waste your money in a blind investment that’s why it is very crucial to get basic population data so that you have a good grasp of the population composition in the area plus the basic socio-economic characteristics within a group in the area where you want to put your business venture.
Part of the subject matter I used to teach is Demography -- a branch of Sociology which is the study of population composition, population projection and basically the age-sex distribution in an area. These data are very important when you are putting up a business. Mixed this data with cultural data and you have a good gauge of the kind of people in a certain area or locality. These data are crucial in setting up a business.
Pertinent Data We Need to Have For a good start in Starting a Business:
- Are there how many people who will utilize the product? How many people are residing in the area by age and by sex? How young is the population, or how old?
- What is the socio economic status of the area and can they afford the product you are going to sell? What are their occupations, average household income and mean average household size are important data as well.
Knowing the Prospective client/customer:
Say for example you are going to set up a store within the area: first thing to do is to collect the necessary population data which can be accessed and found in the portals of Census data in every nation. You can also access population data in your local area as this is also provided in the Census government portals. Other sources of data are the local city office and different offices within the area like the Unemployment Office and the public libraries within the area.
Importance of Census Data and Where to Secure Them
On April 1, 2010 here in the United States, the people will start to fill out mailed questionnaire pertaining to basic population data like age-sex composition of the population, race, average household size and other pertinent data needed for fiscal planning and budgeting. They however posted the latest census data and pertinent household economics in the government portal here. You can access data by state, for example I am here at Texas now I can go to US census website then choose specific state so that you can see the basic socio demographic data you need like race composition, here.
Here in the United States the portal for the Census Bureau can be click here. The current data as of the latest census is also available on this website.
- Age Composition is simply the age distribution of the population, how many infants, adult, middle ages in a certain population. That is why the census data is very important because it usually collects data on the age sex composition of the population. How many are youth ages 13-19 years old or young adult 15-24, or 50 and above, or how many infants are there in the area. This is important because age is very important in targeting of customers
- Sex composition: what percentage of the population are Males/Females. You can also get aggregated data by age and gender
- Median income of the population: this is usually secured at the city hall in your locality, check how much is the average income or the median income of the population so that you will know the buying capacity, and check what kind of labor force distribution within the area so that you will know if they can afford the product you are going to introduce. median income is more important data than the average income because it is a clear description of the capacity to buy within the area. Average income is affected by a very high response like for example there is a millionaire in the area.
- Know what type of occupations people have within the area so that you will know what will be their usual activities. Say for example people who are residents in an area are mostly blue collar job people then you know what products will click to them. Usually these are available in your local city administrators office, or search if they have certain surveys like "Labor Force Survey" which is usually conducted nationally and check if you can get specific local data. Usually these are available in the Internet just know the site you are checking, usually they are government portals.
- The race composition in the area is also important for example, what kind of people or what are the races of the people in the area, should you introduced pizzeria or vegetarian restaurant, burger fast foods or a taco restaurant.
- Get the data on population density the number of people residing in a square kilometer, are they homogeneous etc. This simply means how are they spread out in the locality.
- Get also the data on other businesses that are existing in the area to see if there are competitors.
Success of business:
The future of business depends also on population projection and age sex composition meaning predicting the success of your business lies in what type of people will reside in the area in the future.
Things to do:
Visit your local city office and get data from administrators office or the local city hall library. Basic population data needed are: age-sex composition, median income, occupation, race/ethnicity and population density, list of existing businesses in the area etc.
- Check on websites in government portals about the census population data nationally and locally
- Participate in population data census always, return ,mailed in questionnaire on time. Be friendly and answer questions when interviewers visit your area.
- Check and visit the local government office to secure data such as labor force composition of the area, median income, how the people are distributed, population density etc.
There you go, now you can start to analyze and put together the data so you can have at least the basic information you need when putting up a business.