Starting a data business requires careful planning, preparation, and a strong understanding of the market.  But it's worth it. Having a data business allows an organization to monetize its (and potentially other third party) data, creating a significant—and ideally subscription-based—revenue stream. At Data Buddies our focus is to help companies rapidly build data businesses.

Here are five key things to consider when starting a data business:

1. Identify Market Opportunity: Research and identify the specific gaps and opportunities in the market for data-driven services, and determine how to position your business to address those needs. Look at the competition and assess how your service differs from theirs and what unique advantages you offer.
2. Define Services and Target Customers: Identify the services you want to offer, and target the specific customers that will require your services. You can start by identifying certain industries and end users.  Can you build a proprietary data moat to increase value? What business problems can be solved with your data? How quickly will your data be obsolete?  Can your data insights create actionable intelligence?
3. Build the Team: Determine the skills that will be needed to run the data business effectively. Partner or hire a team with expertise in data management, business intelligence, analytic applications and possibly data science.
4. Develop the Data Product: Are you providing raw data, customized data, analytic applications or a combination?  Will personally identifiable information (PII) be shared? How frequently will the data be updated? Are there other 3rd party data solutions that you can integrate to increase the value of your solution? What transformations need to occur with the data in advance of delivery.  Does your data need to be cleansed and or harmonized? If you are building analytic applications, there is additional complexity including data modeling, KPI definition and user experience.  Select the business intelligence and data management tools based on business requirements.
5. Establish Pricing Strategies: Determine how to charge for your services, considering market competition, service delivery models, and customer needs. Subscription and pay as you go are the most common models.

Many companies are seeking to become data businesses given the vast amounts of information now available and the revenue potential of using that data to create actionable insights. The steps highlighted here provide a high level guide to some of the key activities an organization needs to consider before embarking on this transformation.