How to Start an Online Data Mining Business

Data mining helps predict consumer behaviors.

Starting an online data mining business can be a home-based business or something larger to serve a greater business opportunity. Data mining involves collecting, analyzing and extracting patterns from data. It has become an important function for many businesses and organizations as it offers a way to predict actions or behaviors. Almost all data mining involves computers or digital technology, making an online business a logical model to serve customers. Data mining is practiced in many industries or professions including science, customer relationship management, financial services, security and retail.

Instructions

1. Develop a business plan as a guide to managing your business. Data mining involves a lot of privacy and security issues, so concentrate on this area. Make sure that your plan is focused on data that is collected and shared with permission of the owner, and that it features a strong privacy policy section for handling data.

2. Identify your core service and niche. Focus your efforts on a gap in the market or an area where you can offer some new value to existing customers. For example, reports on who customers are and what they will purchase would interest retail and online consumer-based businesses.

3. Develop your data collection and modeling strategies. Implement this by building or acquiring the software required to collect the data or by acquiring the data from a company or provider. This will involve a database such as Access or MySQL that can be customized to your needs.

4. Make sure your data collection, storage and sharing practices are legal and support the current privacy laws. Opt-in laws make sure that users have understood the implications and agreed to the sharing of their information. Communicate this in your privacy and terms of service policies on your website.

5. Select or develop a formula or algorithm to act as the key tool or engine of your business. Formulas create relationships between variables--such as whether and how much people shop in different weather conditions--that help predict behaviors or actions. This will allow you to examine the data and offer information and reports to customers.

6. Purchase a URL or domain for your website to be hosted on. Make sure your business name is reflected in your choice of URL or domain.

7. Register your business. Meet all legal requirements for operating your business, including paying for a business license.

8. Test your service with one customer or partner before you launch it to the general public. Make sure there are no bugs in the system and that your reports or end products are what the customer needs. Spreadsheet reports are a common way to share quantitative data analysis.

9. Launch your business. Continue testing your system and website after launching.

Tips & Warnings

• Make sure you have an experienced developer building your website or software, as database integration requires a lot of expertise.

• Make sure your reports or products are always accurate and easy to read.

• Stay up to date on changes to privacy laws or regulations that impact your business. Make any necessary changes to your business if there are changes to relevant laws or regulations.

References

• Bplans: Essential Financials for Your Website Plan
• Thearling: An Introduction to Data Mining

Resources

• U.S. Treasury: Federal Agency Data Mining Report 2008