Democratization of SMB Data

The global business data market is dominated by large data firms that have made their fortunes and built their architectures and infrastructures based upon data “about” an individual or a business and not “for” them. This data was first sourced, packaged, and sold to legions of financial service firms looking to extend consumer credit. This data was structured and one-dimensional.

Today, there is little argument that small businesses and entrepreneurialism are the engines that will drive the economy. There are nearly 200 million global small businesses that represent nearly 50% of the world’s GDP. Small businesses and their owners and entrepreneurs behind them represent a critical market segment for financial services firms of all kinds.

 Bolt Research estimates that 50% of the world’s businesses are underinsured and 40% of all small business owners do not have life insurance. Better insuring the Small Business market is a $300 billion dollar opportunity for the insurance industry. Watch this video on YouTube to know more.

In Wealth Management, the market is becoming more and more competitive with the rise of online providers (Robo Advisors), competing for share of wallet. There are over 500,000 traditional offline wealth managers or estate planners and small businesses or their owners represent 25% of the Assets Under Management (AUM) for leading advisors and 50% of the assets that they want to attract.

Just in the U.S., there are over 8,000 commercial banks representing over $1 trillion dollars in commercial lines and loans. Small businesses represent an increasing portion of commercial loans and the competition to reach them has heated up with the rise of online lenders looking to disrupt the traditional lending value chain. The biggest asset traditional banks have is their traditional branch or banking network, but business owners are increasingly staying home and banking online.

In each of these pillars of the financial services industry there are a flood of innovative and disruptive technologies looking to take market share away from the $10 trillion dollar financial services industry. Robo Advisors, Virtual Insurers, and Peer to Peer (P2P) lenders. Small businesses and their owners and entrepreneurs are the new crown jewels of the financial services industry. However, there is one big problem facing the financial services industry that wishes to sell and better market more products to the small business economy. No one has good data on small businesses, and the risk and credit insight provided by the data industry is incomplete.

A different approach needs to be taken to solve this large problem that exists in the market today by turning the problem upside down and focusing on the opportunity. What if you could gather data on small businesses by providing insight, and in turn help the financial services firms that serve small businesses create new revenue opportunities by delivering this service, while continuously gathering data and delivering insight? That is what BizEquity has done with its “Valuation as a Service” VaaS TM cloud based platform and big data service.

This application solves a problem that 98% of all small businesses have. The problem is the fact that today less than 2% of all businesses know their business value. The Business Valuation market today is estimated to reach $8.0 billion dollars this year according to IBIS World. Today this service is conducted nearly 100% by offline providers. The reason that less than 2% of the world’s businesses conduct annual business valuations is because of the time (4-6 Weeks), the cost ($8,000.00), and the intrusion and day to day disruption it causes for the business conducting a traditional offline valuation. The average size of the firm delivering the offline valuation is 2.2 people and the average number of data sources to deliver the comparable data or comps on the particular industry is 1.6. The business valuation market is the perfect market to disrupt, put online, and to democratize.(You can try valuating your company quickly here)

Business valuation and performance knowledge is the on-ramp question financial services firms want their clients and prospects to answer in order to generate more revenue. However, over time, the data generated by the BizEquity engine and the non-linear correlations and insight provided will help fuel risk and credit lending and underwriting models of tomorrow. Insurance protection required; lending capacity needed; and optimal estate and financial planning recommendations, these will not just be the services that the 1% understand, but an insight that will be made available for all small businesses using BizEquity.

We are at the dawn of the democratization of data for the small business owner and the financial services industry that serve them. By helping the business owner answer the most important question that they need to know and cannot today, we have created one of the largest small business data assets. Proper financing; appropriate insurance; and an adequate succession plan is the need of the hour for small businesses, which is what data driven companies like BizEquity aim to achieve.