Profit Minded

A tool for testing a market, or sizing up competition

Image: www.sizeup.com

The Small Business Administration's new Online Learning Center offers a cool—and potentially very useful—tool for owners of existing small businesses as well as entrepreneurs investigating startup ideas. It's a widget from SizeUp, a company that was featured in a TechCrunch Disrupt event last year for its mission to deliver big-business-level intelligence to small businesses.

SizeUp's tool is designed to provide a small business owner with what a high paid consultant might provide for a large business: data that show how your business stacks up against the competition in your geographic area, insight into your customers, and clues about the best places to advertise.

I gave SizeUp a test drive to see what it could tell me about how my own small side-business—a one-woman wedding decorating operation based in Fairfield County, Conn.—compared to others.

I didn't get far: entering my industry and geographic location into the widget prompted the message: "There is not enough data for your industry in that city; please try a more common industry or a larger city." For the sake of the trial, I switched my location to Brooklyn, which is where I started my business nearly a decade ago. That worked—plenty of wedding decorators in Brooklyn.

The tool gave me three options to start with: to benchmark my business by comparing my revenues to all other competitors in that industry; to map where competitors, customers, and suppliers are located, zeroing in on areas with a lot of customers but little competition; and find the best targets for advertising based on SizeUp's intelligence about areas with high revenue or under-served markets.

I started by checking out how much money other wedding consultants make. The widget asked me to enter my annual revenues, my startup year, and my average annual employee salary.

The widget told me that I generate more revenue "than 0% of businesses in your industry in the nation." SizeUp told me that in Brooklyn, average annual revenues for a business in the "Wedding Consultant Planning/Arranging" industry are $143,000. In all of New York City, the average is just over $281,000, and nationally wedding consultants average revenues of over $200,000. The national median is much lower—perhaps because there are a lot of very low-income hobby businesses like mine skewing the numbers—at $110,000.

Another infographic (pictured here) mapped by zip code the neighborhoods with the highest average revenue for wedding consultants. "These are areas you may want to target a marketing campaign or open a future business location," the widget told me. Indeed, the brightest spot on the map covers the Brooklyn neighborhoods of Dumbo and Cobble Hill where I did most of my business in New York.

Where do SizeUp's numbers come from? "Average revenue data for communities is aggregated from data on individual businesses, which comes from hundreds of data sources including, but not limited to, IRS records, county courthouse filings, business publications, and corporate annual reports," according to the website.

SizeUp also prompted me with a list of links to places I can turn for loans, investors, consulting, accounting, business plans, franchising, search engine optimization, website hosting, credit scores, equity analysis, and even buyers if I want to sell my business. Presumably these links are the way SizeUp generates revenue; the service is entirely free to users, with a bit more available to those willing to register with an email address. SizeUp, not the SBA, maintains all data.

You can kill several hours plowing through this free data. Various inputs can generate reports on your cost effectiveness; revenue per capita at the neighborhood, regional, state, and national level; and predictions about what percent of your employees you will have to replace each year based on the local turnover rate. By inputting what you spend per employee on healthcare or worker's comp, you can find out whether you're in line with your industry.

For entrepreneurs scoping out new business ideas or a location for one, there's additional valuable info. SizeUp offers a demonstration use of the tool, for instance, for someone who wants to open a beauty salon that will target fashion models employed by talent agencies in Beverly Hills. It displays on a Google map the locations of competitors, of nearby talent agencies, and beauty supply businesses. "In an ideal world, what you want is a location that doesn't have a lot of competition, but has many potential customers," SizeUp suggests. Based on that wisdom, its mapping tool will tell you the best location to open up a beauty salon.

To get more insight into various uses for the SizeUp tool and the reports it can generate, be sure to watch the "Learn More" demo videos available in the right column on the main webpage.  Find SizeUp on the SBA website here, and let us know in the comments here if what you find out about your market and competitors is useful.

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