Now there’s a click-bait title for you. But Mary Scanlon from WFU and I have lamented the dearth of opportunities to exchange ideas on teaching business research credit classes. So I thought I should share some notes.
This post got as long as some from In the Library with a Lead Pipe (there aren’t any citations at the end, though). I would love to hear what other folks do with these topics.
My ENT/GEO/LIS/MKT 530 class is about the same size as last year (10 students), but is mostly undergraduates this time, with a wider mix of majors including Geography, Marketing, and Design. The overall business knowledge in the class is deeper, which makes discussions easier to get going.
Homework examples are included below; some are fill-in-the-blank while others are open-ended and give students a choice on what industry or business idea to research. All the graded assignments are paperless. Students have to download their data as a PDF table or spreadsheet and attach those downloads in their emailed submission of the completed assignment.
I will make no obnoxious claims that these are the best way to teach these topics and sources! But if you teach some of this stuff too, hopefully you’ll find these examples of interest.
The class begins with industry analysis and then slides into competitive intelligence (CI) and financial benchmarking.
Introduction to Census data for industries
We begin at the whiteboard. I ask a student to write the name of an industry in the center. Then other students have to identify broader and narrower industries. Sometimes the first student names a broad sector or a narrow industry and so you have to modify the discussion a bit.
The next step is to take one of the industries on the board and have the students flesh out its supply chain, ex. how does this product get made or how does it get to consumers? If there isn’t a good industry name on board for this discussion, add “shoe” to the board and ask the students to identify all the industries involved with shoes:
- Wholesaling/distribution (the sector students are least familiar with)
- Repair or shoe-shining (services)
This semester one student mentioned “textiles” as a supplier industry of footwear manufacturing.
In the process, we introduce important concepts:
- Industrial sectors (like a 2-3 digit NAICS)
- Detailed industry (like a 6-digit code)
- Supply chains
- That industry codes are applied to industries and companies
- That nonprofits and governments are industries too
They also begin to learn that you have to be precise in your description of industries. “Shoe industry” isn’t meaningful, for example. Add a reminder to any LIS students about the importance of reference interviewing before helping a patron dive into industry data.
After the board work and discussion, the students go to their computers to look at the NAICS homepage. A quick review of the browsing and search options brings us to a simple search for “shoe” as validation for our previous discussion. Look at any 6-digit code to see how the NAICS record is organized:
- Note the cross-references – often useful;
- Make sure they understand the purpose of the “Corresponding Index Entries” – to facilitate searching and help understand the industry definition;
- Why do you have the three columns (2002, 2007, 2012) with the same number usually listed under each? Look at the “Restaurants and Other Eating Places” industries for recent changes. The Census lists other examples.
After the overview, the students work in pairs to determine the best codes for a few of the industries written on the whiteboard, and for the industries related to the students’ entrepreneurial or career interests. Have them identify a sector as well as 6-digit examples.
That’s usually it for the first day of industries (75 minutes). In addition to keeping up with their textbook readings, I ask the students to review some of the Census help videos and documents for NAICS and industry data, as well as my colleague Orolando Duffus’ new video on IBISWorld. The Uses of Census Data examples are useful too.
Day 2 of industry data focuses on County Business Patterns, Nonemployer Statistics, IBIS, and the related concepts.
We begin class by looking at a research question a student once emailed me. She was working on MKT 429, Advanced Marketing Management, a community-engaged, experiential learning class in which the student teams work on a project for a local company or nonprofit. The question was:
I am working on the Marketing Plan for an ACE Hardware [franchise] in Greensboro, and I’m stumped. I think there’s a database that will help me research this topic, but I’m not sure where to get this information. Can you please help. I’m thinking the consumer or industrial market may be: plumbers, electricians, contractors, etc. But then how do I find out the size and potential of the market. What consumer or industrial market(s) does the organization serve and what is the size and potential of that market? What are the bases for segmentation in that market?
I tell the students they will be answering those questions today.
[Another option to facilitate exploration is to begin class: ask the students to guess the industrial sectors with the most increase and decline in employment in your county, or a nearby rural and urban county, since 2002. Also: what are the biggest industries for self-employment in your county? Write those guesses on the board. Then look up the data.]
We begin to tackle the ACE Hardware question with County Business Patterns. Questions for exploration:
- What types of geographies are covered? (Much more than counties.)
- What does the “Detail” button do?
- What about “Compare”?
- How do you think an “establishment” differs from a “company” or “firm”?
- How do we factor in the units ($1,000) for the payroll columns?
Then the students are (hopefully) ready to analyze the ACE question in terms of industries to measure in Guilford County, NC. I like classrooms in which you can raise the screen and project the computer display directly on the whiteboard, and then annotate the projected ACE question with markers. Example: Which NAICS industries are these? What aspects of the question have we yet to answer? (A: prospects and consumer segmentation)
A discussion question regarding the writing of business plans: how is the payroll data useful? (Financial benchmarking for wages.) We review where County Business Patterns data comes from. This year one student asked about the “Noise Flag”. My guess as to what that means was pretty close; after class I emailed the students details on that from the methodology page. No one asked – thankfully! — a follow-up question after that. I am no statistician.
Next up is Nonemployer Statistics. Is the number of nonemployer contractors significant? And what does nonemployer mean? The notes at the top of that page (as well as a quick look at Statistics about Business Size) help.
It’s important to remind the students that nonemployers are excluded from almost all Census industry datasets. Students can discuss what types of industries are likely to have many nonemployers. Look up your favorite county and skim the sectors to see for sure.
Then a quick look at the hardware stores report in IBIS, including the “Outlook” and “Products & Markets” chapters. I share with the students the assumption that IBIS uses Census data heavily for its statistics and projections, even though (unlike BizMiner) no sources are named. The students compare the NAICS industries module to the “US Specialized Industry Reports” modules. (One student this year was excited to see that app development is covered in the specialized collection. Also smoothies, the focus of another student’s current business.)
We conclude day two with a very quick look at how you can map CBP data (at a 4-digit NAICS level) in SimplyMap. That is really just a “show and tell” because I don’t want to have to spend serious time teaching how to use SimplyMap right now. In late February Steven Swartz from Geographic Solutions will be visiting class to train us in using the product for marketing research.
Day three focuses on the Economic Census and introduces American FactFinder. Some students later return to AFF to use County Business Patterns and Nonemployers, which I find interesting since I prefer the native CBP and Non-E interfaces.
I have Jennifer Boettcher and Leonard Gaines’ 2004 book Industry Research Using the Economic Census: How to Find It, How to Use It on reserve and have the students read the still very useful first three chapters. The Uses of Census Data examples help me decide what to focus on in class. Students also (hopefully) look at the videos.
We have to begin with a discussion of the Economic Census roll-out calendar. Last year we just had the completed 2007 Census to work with (pre-recession and so especially out of date for 2014 applications). This semester we have a partial rollout of national-level data but still have to use 2007 for state-level data or the really detailed reports. So right there is an upfront complication for teaching the Eco Census in Spring 2015. That helps students understand why there is demand for value-added subscription products like IBIS and BizMiner.
After reviewing the release schedule, we review how the Economics Census is conducted, look at one of the industry-specific Census forms, and get into FactFinder. I recommend the students use the Advanced Search to first select Topics –> Dataset –> 2012 Economic Census, and then use the Industry Codes selection tool to add their NAICS code. The product codes show up too, so you have to mention that those exist and promise to use them in a search later. Now we can see what 2012 reports have been published so far. (Of course, they are many other ways to configure an Eco Census search in AFF).
We begin with any industry’s “summary statistics” report in order to ask the question “What data do you see here that we did not see in County Business Patterns?” (A: sales data)
Then we look at a few more detailed examples of Economic Census data for quick discussions about how the data is useful:
- Semiconductor manufacturing: Materials consumed 2012: What stuff do such factories have to buy to make semiconductors? What kind of suppliers do they need? And therefore what manufacturing (and mining) industries does this industry support?
- Industries consuming the product semiconductors 2012: Which industries buy semiconductors; who buys the most? So who are the best customers? Or should you specialize in making conductors for one narrow segment of customers?
- Sporting goods stores: Product lines 2012: (One of the marketing students understood the value of this table immediately): What products sell the most? What supplies are most important to stock? What opportunities might there be to specialize your product line? Are there regional variations in product line sales to be aware of and take advantage of?
- Wineries: Detailed statistics 2007: How can this long list of expenses (better viewed by transposing the table) help you plan your income statement? Can you compare your own winery to industry averages by converting to ratios? (I speculate to the students that this is the key data for BizMiner’s financial report analysis.)
Day four – the final one for industry data – begins with Occupational Employment Statistics. I blogged last summer that the OES was my favorite tool I learned from class last year. Check out that post for a suggested lesson plan. The current students also enjoyed looking up their proposed or current occupation, and enjoyed guessing the occupations with high location quotients in New York City.
We then look at the state and MSA industry data in BizMiner, providing more current and more local data than the Economic Census provides.
Class ends with a quick review of the….
The industry research assignment:
Scenario: Your friend is considering opening an animal hospital in Mecklenburg County, NC (which includes Charlotte) and asked for your help to measure the local industry size as well as projected industry growth.
- Identify the best 6-digit NAICS code for this industry: # ______________
- In 2012, how many employer establishments for this NAICS code exist in Mecklenburg County, and what was the annual payroll? (Note the units for the payroll data.)
# of employer establishments: ___________
annual payroll: $___________
- In 2012, how many nonemployer establishments for this NAICS code exist in Mecklenburg County, and what were the annual receipts? (Note the units for the receipts data.)
# of nonemployer establishments: ___________
annual receipts: $___________
- In the BizMiner database, identify the best 10-digit NAICS code for your friend’s proposed business. Then identify the annual market volume for 2014q2 (use all sales classes) for the Charlotte-Gastonia-Rock Hill, NC-SC urban area.
10-digit NAICS code: ___________
Annual market volume: $___________
- What is the state of this industry’s life cycle, and the industry revenue outlook (national-level) from 2016 to 2021? (Note the units.) [the students should know by now to use IBIS for projections]
state of the industry life cycle: ___________
2015 projected industry revenue: $___________
2020 projected industry revenue: $___________
The Economic Census assignment (due a week later):
Use the 2012 Economic Census for 1-3:
1. What were the total sales for employer Offices of Certified Public Accountants? (Be careful with the units for all these questions.)
2. What three services offered by Offices of Certified Public Accountants brought in the most sales for that industry? (Hint: “Preliminary Product Lines” will be in the title of the table.)
3. In dollars, how much high fructose corn syrup was consumed by ice cream manufactures?
Use the 2007 Economic Census for 4-5 (state-level data like this is not yet available for 2012):
4. In North Carolina, how many full-service restaurant establishments had an average cost per meal of $30 or more? And what were the average annual sales for those expensive N.C. restaurants (i.e. per establishment)? (Hint: if you have trouble finding the NAICS code, remember that the codes sometimes change over time.)
# of establishments: _______________
Average annual sales per establishment: $_____________
5. In North Carolina, do full-service restaurant establishments featuring a principal menu of Italian, Mexican, or Chinese cuisine have the highest per-establishment annual sales?
Cuisine type with the highest per-establishment annual sales: ________________
Their per-establishment annual sales: $_________________
Teaching competitive intelligence
To begin discussing competitive intelligence, the students gather around the big whiteboard with markers in hand to discuss the question “what do you need to know about your competitors?” We create our own big CI analysis grid. The students have seen an example grid from one of our textbooks; some have already created such grids for their Feasibility Analysis or Business Plan class. Then I ask the students to note research sources for each category, like “annual sales” and “product mix with prices”. Primary v. secondary research comes up. We compare direct competitors to indirect to substitutes, and soon we run out of space on the wall. I remind the students that we will discuss social networks and trade literature as research options after spring break.
After that lengthy discussion, we use the computers to explore creating competitor lists in ReferenceUSA. One saved question I use for practice:
Steve, my name is Donna and I am taking the ENT 600 class this term. Our project involves completing a feasibility analysis and business plan for a museum/video art gallery. Do you know how we could get a list of all of the museums and art galleries in a 25 mile radius? Your help is much appreciated.
Another one gives the students a taste of the customized 6-digit SIC codes in ReferenceUSA:
My name is Chris. I’m interested in finding out the location and date of establishment of every hookah bar in the United States (it’s estimated there is about 300-400). Do you know of a website that could be used to find this information? Would the website be different for each state? Thanks for your help,
We conclude the first CI day by watching InfoGroup’s video on how it gets its data and a short follow-up discussion.
On day two of CI, I mention Duns/Hoovers/Mergent Intellect as a competitor to InfoGroup, and add that we just switched (without going into all the details). We briefly discuss how a company database can also be considered a marketing tool in the context of business-to-business, as in identifying customers that are companies.
I decided we should also discuss public companies a bit. We looked at some corporate annual reports (passing out paper copies), and the students discussed the value of the promotional/glossary opening section and the less visually-appealing accounting section. I also mentioned 10-Ks (and their Item 7, Management Discussion) as an example of SEC filings. But I didn’t provide time to learn about finding those documents.
Afterwards I wondered if this short segment on public companies was really worthwhile – it might have been too short to be meaningful and memorable to the students. I should probably have either added some active learning exercises tied to CI and financial benchmarking, or just not bothered at all. A lesson for next year.
David Turner, the NC LIVE InfoGroup sales representative, spoke to class yesterday (and did a great job – thanks, Dave) and provided additional training in ReferenceUSA. He had some very interesting things to tell us about how InfoGroup gets its data on companies and consumers; the nature of its contracts with the big search engines like Google; and the very limited use they allow of their cell phone number database.
Competitive intelligence assignment
Just a couple of searches in ReferenceUSA and a little thought exercise.
1. Dance Schools.
- How many dance schools are there in North Carolina (according to ReferenceUSA)? _________
- What is the most common employee size of those schools? ________
- Indicate which industry code you used: SIC #_____________
2. Manufacturing consultant scenario
Scenario [fictitious this time]: An expert in industrial management wants to go into the consulting business, with a focus on North Carolina Triangle-area (not the Triad), small ($2.5 million or less in annual sales), privately-held manufacturers. He doesn’t want to deal with subsidiaries or branches, since companies with subsidiaries or branches are big firms that often have their own experts for such work. You have been hired to provide a list of such manufacturers for the expert. The expert will work through the list as potential clients.
How many companies meet this criteria? _____________
Add to this document screen-capture(s) of the review criteria (you might need several shots to cover all your selections). [These screenshots are much more important to me than the number of companies the students report.]
3. Thinking about indirect competitors
Identify three types of indirect competitors for a performance theater (the kind of theater in which you watch a play):
Teaching financial benchmarking
Earlier in the semester I brought to class an armful of thick feasibility plans from ENT 300 for the students to skim through, including the “Price & Profitability” financial section. I also show the students the complex and detailed spreadsheet created by SCORE that the students now use in that class.
Now, I have to confess that entrepreneurial finance is not exactly in my comfort zone as a business librarian. But I am getting more confident. I remind the students that this class is about finding secondary research that supports creating a business plan. Therefore understanding all aspects of the financials is not necessary.
But we do discuss how the finances are usually the hardest part of a business plan (and feasibility analysis) to write, and do define basic concepts like the balance sheet, income statement, and profit ratios. Then we review how to find benchmark data that can help an entrepreneur make reasonable assumptions about his or her numbers.
The students have some financial notes in Blackboard and I ask them to watch my longish benchmarking video.
We review sources for benchmarking:
- County Business Patterns (payroll data)
- Economic Census
- RMA eStatement Studies (newly introduced)
- ReferenceUSA/company directories (for typical local company size by sales and number of employees).
Tomorrow the focus will be a case study on local restaurant company Village Tavern. The students examine a recent newspaper article on this company for financial clues and then use the above sources to analyze its likely financial situation. I provide suggestions as needed but otherwise let the students play financial detectives. This case study should be good practice for the…
Financial Benchmarking assignment:
You are considering opening either
- A fitness club in Forsyth County, NC, or:
- Your own business idea in your target county [identify the idea and place right here:] (This could be a student’s capstone topic.)
You need to begin developing the financial sections of your business plan. In preparation for this work, you need to benchmark financial data and profitability for the industry. Assume your proposed business will have paid employees.
Use BizMiner, RMA eStatement Studies, ReferenceUSA, Census.gov, and the Bureau of Labor Statistics to collect the most relevant data you can find. Download the data, provide a short description below of what you downloaded and why it’s useful, and be sure to attach all your data in your email to Steve.
- BizMiner: what I found and why it’s useful:
- RMA eStatement Studies: what I found and why it’s useful:
- ReferenceUSA: what I found and why it’s useful:
- Census: what I found and why it’s useful:
- Bureau of Labor Statistics: what else I found and why it’s useful:
- Remember that you are benchmarking for a start-up business, not an ongoing business with large annual sales. Bear that in mind regarding “the most relevant data.”
- Likewise, is there a more specific industry code in BizMiner or ReferenceUSA that you should be using instead of a 4-digit SIC or 6-digit NAICS?
Next week begins two weeks on consumer marketing with a focus on demographics, consumer spending, and psychographic data, and then one week of review and practice before spring break. That final week also serves as potential make-up time in case the North Carolina Piedmont gets a half inch of snow and campus shuts down for two days. (Well, I’m teasing as a Michigander here, but Carolina ice storms can be quite nasty.)
If you have your suggestions or ideas for teaching these topics, I would love to hear them.
If you read all the way down here to the bottom of this long post, thank you!