Do you want to start a data mining company? If YES, here is a detailed guide on how to start a data mining & analytics business with no money or experience plus a sample data mining & analytics business plan template.
Data mining by sifting through large collection of data in order to discover hidden connections as well as predict future trends has been in existence for a long period of time. Data mining was actually coined in the 1990s from its foundation of statistics, artificial intelligence and machine learning.
It has continued to evolve in order to keep pace with the limitless potential that comes with computing power and big data. The last decade has witnessed an advancement in computing processing power and speed which has allowed for different data analysis and analytics companies to be able to spring up and offer services to various industries.
A lot of businesses, from financial service firms who use data mining and analytics to determine the next big stock, to retail operations who make use of data analytics to be able to track the purchases of their customers, are now relying on data mining and analytics in order to be able to manage the information they keep receiving.
Large scale corporations have even gone ahead to start their own data mining and analytics operations. However, in order to become a successful data mining and analytics business, one has to find industries and businesses that do not have the internal resources to mine their own data.
Data mining is being used across a variety of businesses and industries; however because many small businesses are not able to implement data mining techniques, it has left them vulnerable to several challenges in the business environment.
This is why data mining and analytics businesses are usually called in because these data mining and analytics businesses have the right techniques to examine data as well as spot trends in the industry which can be used as leverage for these companies to sustain and grow their business.
Steps to Starting a Data Mining & Analytics Business
1. Understand the Industry
According to Gartner, it is expected that the industry will be valued at nearly $23 billion by 2022. According to a report by Business Intelligence, the entire industry will have generated revenue of nearly $21 billion by 2018, which then means that the CAGR for a five year period (2013 to 2018) will rise to an estimated 8.3 percent.
The Internet of Things (IoT) enabled data analytics according to Forbes, has the ability to maximize operational efficiency in every industry from city planning to retail. Many technology giants have now started investing more in data analytics capabilities.
An extension of data mining is the analytics which is the process of forecasting future probabilities after information has been extracted from existing data.
Predictive analytics which indicates what might happen in future is often applied to business in order that the current data might be used to better understand customers and products as well as help the company identify potential opportunities and risks.
Predictive analysis has gone further by examining data and using this to determine what decision should be taken and also trying to see the effect of the decision in order to make adjustments before the decision can be taken. Industries nowadays harness predictive analysis in ways that are peculiar to their industry.
According to Wikibon, it is projected that the industrial internet on a global scale – taking hardware, software and service sales into account – will be worth $500 billion by 2022.
The study also states that while 36 percent of enterprises have invested the majority of their time in data analytics; 13 percent have used these data analytics to predict outcomes, while about 16 percent have used the analytics applications to optimize strategies as well as processes.
And so companies are moving from simple analytics to predictive analytics and optimization in order to be able to remain competitive in their industries in the future.
According to Gartner, about 40 percent of data science tasks will become automated as the application of artificial intelligence (AI) and natural language processing (NLP) to data mining and analytics will allow for the transfiguration of the entry barrier for data miners and analysts, where the barrier will either be lowered or removed completely.
This means that even though one is no data analyst, there will be a software in place that will allow for those without these set skills to be able to mine their data and get it analyzed. There are however still several challenges regarding this process that will still need to be looked into if the industry is expected to allow for increase in productivity and Competitive Advantage.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require the services of a data mining and analytics business include small and large scale organizations in the technology, telecommunications, information technology (IT), manufacturing, hospitality, aviation, retailing, insurance, healthcare, defense, financial and banking industries.
If you are therefore looking to define the demographics for data mining and analytics business, you should make it as all-encompassing as possible and also try to include the public sector as well.
3. Decide Which Niche to Concentrate On
The data mining and analytics business is useful to a lot of industries as many companies in these various industries have been able to run their businesses better due to better decision making that have been made possible due to the right data being made available.
Many companies do not mind spending a lot in order to be able to get services such as this that will enable them to not only have a better share of their target market but that will also make them stand out from competitors. Some of the niche ideas within this particular industry that one can specialize on are;
- Data mining consultancy
- Business Intelligence
- Scientific computing
- Fraud detection services
- Data management software
- Security software
- Advanced analytics
- Personal data protection
The Level of Competition in the Industry
The level of competition in the data mining and analysis industry does not depend on the location of the business because this is a kind of business that can be conducted from anywhere in the world.
Even though several large scale companies have their own data mining and analytics operations, there are still a lot of industries and organizations within these industries that engage the services of data mining and analytic companies.
Since there is practically no barrier when it comes to this kind of business, clients are always looking out for the companies which will best serve their needs and enable them achieve their goals and intentions regardless of where such companies might be located.
Even though there are many niches in the data mining and analytics industry; it doesn’t mean that you won’t be facing intense competition from the big and successful brands within the united states and outside it as well. Therefore, it is important that you remain prepared in order to be able to meet up with the level of competition that you are likely to face.
4. Know Your Major Competitors in the Industry
The data mining and analytics business industry might not be as old as some industries but there are brands that are already well known due to several factors and activities in the industry that have made them stand out.
Some of the reasons why these brands are well known is due to the quality of services they offer, their customer service relationship, the ways they have used data innovatively, their marketing and promotional strategies as well as the length of time they have spent in the industry.
Some of the well-known data mining and analytics businesses in the United States are;
- Uber
- Foursquare
- Zapier
- Spotify
- PlaceIQ
Economic Analysis
Businesses that had been slow in adopting data mining have had no choice than to try and catch up with those already making use of the process. Data mining which involves the extraction of important information in order to analyze the results has been very critical in helping businesses make their decisions. It is expected that in the coming decade, data mining and analytics will become as important as most of the existing technologies being used today.
The arrival of the IoT (Internet of Things) has brought forth an uncountable amount of data and is therefore increasing the demand for real-time data analysis and management. According to Gartner, more than half of all the data mining and analytics firms worldwide will make use of advanced analytics and algorithms in order to become more competitive and help businesses become better especially when it comes to certain decision making.
Businesses that are data driven are more likely to make decisions five times faster than their peers who don’t and also more likely to land as one of the top financial performers within their industries.
Data mining and analytics now known as Business Intelligence has greatly changed how organizations move forward even though it was initially restricted to large enterprises and seen as a sophisticated tool, thereby allowing these large scale companies to maintain their advantage over others in the industry.
However, this is changing as small and medium businesses (SMBs) are desperate to begin taking advantage of the same analytics just like the big players and have therefore sought for alternatives such as self-sufficient data mining and analytics tools.
5. Decide Whether to Buy a Franchise or Start from Scratch
If you are starting a business in an industry that you feel is challenging, then your best bet will be to buy a franchise because buying a franchise will help you pass through the start-up challenges faster as opposed to starting the business straight from the scratch.
A franchise opportunity even though it will be helpful to the entrepreneur has to be thoroughly researched on so that you do not end up wasting money and time buying something that will not be beneficial to your business. The data mining and analytics business industry is not one where franchise opportunities are available and so if you are looking to start this business, you will need to start from the scratch, merge with or buy an existing company.
As one who is going to start their business right from scratch, it is important that you have an in-depth knowledge about the business. The knowledge should be one acquired from research your familiarity about the business.
Having thorough knowledge about the business will allow you lay the right plans and build the right business structure as well as craft the best strategies for it. If you have no experience running a business, it would be best to start on a small scale and then grow the business from there.
6. Know the Possible Threats and Challenges You Will Face
Threats and challenges is what everyone faces either in the business environment or otherwise and so no entrepreneur should look towards starting a business without knowing to expect challenges and threats and how they can be easily handled in order that the business might not be affected. It is important to note that not all threats and challenges can be handled and so when these sorts occur, the best you can do is remain focused and optimistic.
Some of the threats and challenges that you are likely to face when looking to start your data mining and analytics business are; stringent and unfavorable government regulations, stiff competition from already existing data mining and analytics businesses and lack of awareness from prospective clients about the benefits of the data mining and analytics business.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
One of the most vital decisions that you make that will have an impact on how your business can grow and attain its goals and objectives is the appropriate legal entity to use. If you pick the wrong legal entity, you would find that your business is not able to achieve its full potentials.
When you are looking to choose a legal entity for your business, there are several attributes defining the legal entities that you would need to take into consideration and they include; ease of set up, ownership and control, flexibility, taxation setup, limit of the liability. The legal entities available for entrepreneurs in the United States include; sole proprietorship, partnership, Limited Liability Company (LLC), and corporation.
The sole proprietorship and partnership kind of legal entities are somewhat similar in nature. Both legal entities are simple and flexible, tax is paid just on the personal tax returns, and all the profits made are owned by the entrepreneur(s).
However, the business is dependent on the entrepreneur and should he die, the business dies with him. Also, personal liabilities under these sorts of legal entities are unlimited, which means that should the business run into debt, the owners can be held liable.
The LLC and corporation are also regarded as similar because of certain attributes such as the limited liability, where the company is regarded as a separate entity from the owners and therefore owing to this fact can sue and be sued. However, the LLC is regarded as simpler and more flexible in terms of set up and control when compared to the corporation.
The LLC enjoys single taxation unlike the corporation where double taxation is applicable. Depending on the scale of your business, you can decide to use any of the legal entities but you should know that most entrepreneurs running this kind of business choose to incorporate instead of picking a sole proprietorship.
8. Choose a Catchy Business Name
One important aspect that must be handled before you can think of applying for a business license or incorporating the business is your Business Name. The business name is very important because it enables you stand apart from others running the same business as yourself.
When choosing your business name, ensure that it is unique, easily memorable and pronounceable and isn’t in use by someone else especially in the same industry. Some of the catchy business name ideas suitable for a data mining and analytics business include;
- Sluz
- Wizzy Data Services
- Comey
- Protech
9. Discuss with an Agent to Know the Best Insurance Policies for You
While having insurance policies is not a prerequisite for starting any business in the United States, it is usually in the benefit of the entrepreneur to buy insurance policies that will protect his business, his bottom line and employees should any disaster occur to his business. Therefore, it is important to set aside certain amounts of money in order to buy insurance policies for your data mining and analytics business.
To however know the right insurance policies to purchase, it is best that you engage the services of an insurance agent or broker who will advise you on what policies you would need to purchase. Some of the insurance policies that you should consider buying for your data mining and analytics business include;
- General Liability Insurance
- Health Insurance
- Workers’ Compensation Insurance
- Payment Protection Insurance
- Errors and Omission Insurance
- Business Owner Policy (BOP) Insurance
- Cyber Liability Insurance
- Auto Insurance
- Employment Practices Liability Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
The data mining and analytics business is one where you dig through a large collection of data in order to extract information and then analyze it in such a way that it will be useful to your clients. This sort of business is not one where you would need to apply for intellectual property protection (IPP) before starting or running the business.
However, if you feel the need to protect your company name, logo and any other software or concept, then you might need to seek the advice of an attorney that is well versed in your kind of business to help you with applying for an IPP.
11. Get the Necessary Professional Certification
The IT industry requires professional certification in order to not only stand out but also attract the best clients for your business and so regardless of how excellent and proficient you are at what you do, clients will develop more confidence in your business if they know that you are certified.
You can make a thorough research on the kind of professional certifications you will need for your data mining and analytics business. Some of the top professional certifications that you would need to get for your data mining business include;
- Certification of Professional Achievement in Data Sciences
- Microsoft Certified Solutions Expert (MCSE): Data Management and Analytics
- Certified Analytics Professional
- Mining Massive Data Sets Graduate Certificate
- Analytics: Optimizing Big Data Certificate
- Cloudera Certified Associate (CCA) Data Analyst
- SAS Certified Big Data Professional
The more certifications you acquire, the better your chances of boosting your profile and getting noticed by the right clients.
12. Get the Necessary Legal Documents You Need to Operate
Regardless of the business you are looking to go into in the United States, having the necessary legal documents is important because it will ensure that you do not run into trouble with constituted authorities. The truth is you cannot run any business successfully in the United States for a long period of time without proper documentation.
Even if you succeed in starting, it won’t be long before the law catches up with you and then either you are fined or you are banned from running the same kind of business within the state or even the entire country.
If you have no idea of the list of legal documents that you would need, it is best you seek the advice of an experienced IT consultant or you engage the services of an attorney familiar with your kind of business. The list of legal documents that you would need to run your data mining and analytics business include;
- Certificate of Incorporation
- Operating Agreement for LLC
- Business Plan
- Business License and Permit
- Business Certification
- Insurance Policy
- Contract Documents
- Employer Identification Number (EIN)
- Federal Tax Identification Number (TIN)
13. Raise the Needed Startup Capital
Whatever business you are looking to start, one thing that cannot be overlooked is the start-up capital because it is with the start-up capital that the business not only becomes a reality but also gets sustained till it is able to generate money to sustain itself. A data mining and analytics business requires a substantial amount of money especially to buy the necessary equipment that will allow for smooth data mining.
If you do not have all the capital you need, ensure that you have a business plan in place that will convince venture capitalists and other potential investors of the viability of your business. Some of the financing options that you would need to explore for your business are;
- Generating your start-up capital from your personal savings and sale of stock
- Sourcing for soft loan from friends and family members
- Raising part of your start-up capital from angel investors and venture capitalists
14. Choose a Suitable Location for your Business
One of the most important decisions that you will have to make when you are looking to start your data mining and analytics business is the appropriate place to locate your business in order to gain the visibility that you want for your business.
The data mining and analytics business is one that you can run from home as you can use the internet to advertise your services and attract clients to your business. If you are starting off on a small scale, it won’t be a bad idea to run the business from your home and once you feel the need to expand, you can look to renting or buying a facility to run the business.
If you are going to be renting or buying a facility, then it is important that your facility is in a place that can be easily accessed by your employees as well as by clients who might want to physically meet with you. Having your facility in a conspicuous place also helps with marketing because it means you will spend less in creating awareness for your business.
If you do not understand the dynamics of looking for a location, ensure that you engage the services of a real estate agent as this will help you allocate less energy in searching for the right facility. Make sure that the real estate agent has an idea of how much you are looking to spend in securing the facility.
There are other options to consider when looking to get a place to run your business and using a shared workspace might be to your advantage especially as you get to pay less and you get to be among people who can help spread word about your business.
15. Hire Employees for your Technical and Manpower Needs
Data mining and analytics is one of the most used methods of extracting information from large datasets. There are various techniques used when it comes to data mining and whatever technique is being used has to depend on the kind of problem one is looking to solve.
Asides from extracting information from a large collection of data, analyzing the information in order to extract meaningful information to be used in growing a business or solving a problem still remains challenges to most. The thing with data mining and analytics is that there are various tools and techniques that are used depending on circumstances surrounding the client.
For instance, a startup will use different data mining tools and analytics to analyze trends regarding certain decisions that should be made by the business, which will be different from the tools used by a manufacturer who needs to analyze inventory and products to be manufactured.
The data mining and analytics business requires having the right knowledge, tools and time to be able to run the business effectively. In order for this to be in place, substantial financing is required in getting the right equipment and hiring the right people.
Building the right business structure for your data mining and analytics company is very essential because hiring competent and experienced people will ensure that you are able to achieve your goals faster. Also, ensure that those you have hired understand the goals of the company and will be willing to work to see these goals being fulfilled.
Some of those that you will need to hire are; Chief Executive Officer (CEO), Admin and Human Resource Manager, Business Development and Marketing Executive, Data Miners and Analysts, Customer Service Executive, and Accountant.
From the above analysis, you will require at least 8 key staff in order to run your data mining and analytics business successfully.
The Services Delivery Process of the Business
Digging through a mountain of data in order to extract useful information is referred to as data mining and even though it is not a simple process due to the fact that data is usually approached in a systematic and mathematical fashion, it nonetheless is very flexible.
The process involved starts identifying the source information where you check different collection of information and datasets and then combine this to build a picture of what you are looking to achieve.
Picking data points helps in identifying the data that needs to be analyzed. This however depends on the complexity of the data as well as the information you will be working with. The next process is extracting and identifying key values by relying on current and past data in order to produce a structure of the past, comparing them to the new information.
The final stage is usually in interpreting and then reporting results. In order to interpret the result well, the information is usually divided into equal quantifiable values in order that specific elements might be picked out. Once the elements have been picked out, it is then combined into a final result.
16. Write a Marketing Plan Packed with ideas & Strategies
Marketing depicts the process of knowing your target market and anticipating their needs in order to ensure that those needs are being met. Marketing is a very vital part of any business – new or existing – because this is how a business not only generates revenue but is able to ensure that it is being identified amongst similar businesses in the industry.
The importance of marketing is why entrepreneurs take their time in crafting a marketing plan because the wrong plan will result to crafting the wrong strategies which would be detrimental to the company’s growth and bottom line.
However, in order to draft the marketing strategies that will enable your business to become successful, you must first conduct a thorough research that will allow you identify your target market and then enable you identify the niche that you intend to focus on.
The market research will also enable you know who your competitors are and how best you can take advantage of whatever weaknesses they have in order to be able to have the needed leverage for your business.
In order to draft effective marketing strategies that will allow you penetrate the market and get a fair share, you might need to engage the services of an IT consultant that has had successes with helping businesses similar to yours. Once the consultant has an idea of what you are looking to achieve, then it is their job to ensure that whatever strategies are crafted will be in line with your overall goals and objectives.
Asides from engaging the services of an IT consultant, you might also need to recruit marketing executives because the consultant is an outsource that has no idea about the daily workings of your company as in-house marketing executives would. Below are some of the marketing ideas and strategies that can be used for your data mining and analytics business;
- Ensure that you formally introduce your business to corporate organizations by sending introductory letters and a brochure listing your services, contact information and rates
- Advertise your data mining and analytics business in newspapers (local and national), ICT magazines and on radio and television stations
- Empower your marketing executives to physically engage in direct marketing
- Ensure that your business is listed in creditable IT directories and online directories as well
- Attend ICT seminar, events, expos and business conferences in order to network and meet potential clients
- Use social media platforms such as Facebook, Twitter, Linkedin and Google Plus to market your services
17. Develop Iron-clad Competitive Strategies to Help You Win
There are very few industries where monopolies exist and so every entrepreneur starting a business has to ensure that there are competitive strategies in place that will enable their business thrive and grow while competing against those that are already in the industry.
Not having competitive strategies in place means not being serious about the business you are looking to start as instead of being proactive and staying on top of your competition, you become reactive, therefore always one step behind your competitor.
Some of the competitive strategies that you will need to have in place in order to win over your competitors include; maintaining a consistency in the quality of your work, building a solid business structure, and having the best customer service relationship.
18. Brainstorm Possible Ways to Retain Clients & Customers
No profit-oriented business dare underestimate the value of customers which is why strategies are crafted every now and then to attract the right customers. However, while it is necessary to always have strategies for attracting the right customers to a business, it is more necessary to also ensure that a high number of the customers that patronize the business stick to the brand.
Companies that develop strategies that will enable them retain a high number of their clients always have an advantage over those that do not and this is because loyal customers always spread word about the company which they are patronizing, thereby helping the company attract more clients without actually putting in the resources.
There are several reasons why clients usually stick to one brand and one of them is when they consistently have their expectations met. As a company, it is important that you not only strive to meet the needs of your intended target market but you should also ensure that you exceed it as well.
Also, clients want to feel that they are a valuable part of your company and so it is important that you create a topnotch customer service relationship with your clients. Ensure that complaints are quickly resolved and that inquiries are quickly attended to.
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Every entrepreneur understands the importance of boosting awareness for their brand as well as creating a corporate identity. No one wants to start and run a business that people will over time not be aware of because the more people aware of a business, the easier it will be to generate revenue that will sustain and grow the business.
Business promotion and marketing work hand-in-hand because it allows the entrepreneur to create strategies that will enable them not only penetrate the market and become known but also compete fairly against competitors in the industry.
The benefits that successful companies always get from boosting awareness for their brand and creating a corporate identity is why many do not mind setting aside a certain amount of money every year in order that they might be able to continually reap the benefits of promotion and advertisement.
As one who is looking to gain the awareness of its intended target market, you should know that there are several ways you can do so as the internet has offered a lot of entrepreneurs the opportunity to promote their brand to a wider audience in ways that have become more effective for businesses in this age.
If you are looking to get an edge over your competitors, then getting an experienced consultant is necessary so as to help in boosting awareness for your brand and creating a positive corporate identity. Below are some of the strategies that you can use in boosting awareness for your brand as well as creating a corporate identity;
- Encourage your loyal customers to help spread the word about your services
- Create a professional website and leverage on this to promote your services and boost awareness for your brand
- Distribute business cards at IT and business seminars, conventions and events
- Use social media platforms such as Facebook, Linkedin, Twitter, Google Plus to promote and advertise your business