Check the time

       It’s important to look not only at how recent the data is but also at the time period the data covers. For instance, here are two headlines adapted from real newspaper stories reporting on the same study:

      ■ “VC funding falls to 7-year low”

      ■ “VC funding increases by 7 percent”

       Both headlines were completely accurate. Both reported on the same study. Yet the first focused on data for only one quarter of the year; the second article reported on the total amount of funding for the entire year compared to the year before. So look for data that covers reasonable time periods.

      Remember, the types of questions a researcher asks, the size of the survey sample, the composition of those surveyed, and the methodology for compiling the data can all dramatically influence the results produced.

      Generally, the most accurate sources are:

      ■ Government data. Data from government sources, particularly from the U.S. Census Bureau, is generally regarded as fairly accurate, as it’s drawn from large samples. Also, it’s expected that such data is free from inherent bias.

      ■ Private research company data. Private research companies charge large sums of money to gather data relating to an industry. Since their primary income derives from the sale of such data, its accuracy directly relates to their ability to stay in business.

      ■ Studies conducted by universities. Generally, studies conducted by university faculty and researchers are highly regarded. Such studies typically undergo academic review and likely follow accepted research procedures. Ideally, such studies are relatively free of bias.

      ■ Studies using large samples. The greater the number of respondents, the more likely the information they supply reflects reality.

       THE GOOD VS. THE BAD

      In many situations, finding information about the methods used to collect data can help you evaluate its credibility. For instance, trade associations may be an excellent source of data, since many of them collect information about their own industries. Still, this data may be either highly reliable (when it comes from those associations that are careful and objective in their research) or highly unreliable (when, for example, an association uses data for political or marketing purposes).

       Data with an agenda

       Be particularly cautious when evaluating data from certain types of sources. This can include:

      ■ Statistics from individual companies, which may have manipulated data to increase sales

      ■ Data from politically or economically motivated organizations, which may have had a special agenda and used research techniques that support the message they want to send

      ■ Data from studies with very small samples, which may not represent reality

Organize Your Data and Avoid Plagiarism

      As you comb through dozens of databases and various resources looking for the information you need, you’ll find you may lose track of where you spotted a particular statistic. So, when you’re ready to prepare your business plan, marketing strategy, or business proposal, you may discover you have no idea of the source of some of your data. This can create some very unfortunate results.

      Readers of business plans and other business documents will want to know the sources of the information in your work. They may question you about your conclusions, therefore you need to be able to cite the sources of your data. Many entrepreneurs have had their business plans rejected by investors because they couldn’t support claims about the size of their market or their potential profit margins.

      Appropriate citations are particularly important in academic papers. Plagiarism can result in your failing a class or facing disciplinary action. The business world, too, views plagiarism as a sign of untrustworthiness. Potential investors or partners will avoid doing business with you if they suspect you of such behavior. Even when no one suspects you of behaving unethically, failure to keep track of your sources is sloppy—and dangerous.

      To avoid these types of problems, carefully organize your findings, and always note sources and resources while doing your research. As you collect data, be certain to note where you found it, the source of the data, the URL of the website and access date (if you found it on the Web), or the database, book, or research report it’s from.

       See page 73

      ENTREPRENEUR’S WORKSHEET

       Organizing Data Sources

       As you do your research, use this worksheet to organize your research sources.

       challenge

      Remain at the top of an industry in the face of fierce competition and a volatile global economy

       solution

      Carefully research every aspect of customers and industry

REAL-WORLD CASE

Luxury Doesn’t Just Happen: The Ritz-Carlton Hotel Company

      The president of the United States gives only one award for quality in business—the prestigious Malcolm Baldrige Award. So it’s a

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