For example, in a restaurant, every order will be recorded. However, a restaurant won’t learn much by looking at each one in isolation. Analysis of the orders will reveal trends and patterns, such as peak dining days or biggest-selling menu or bar items. Knowledge of the business comes from the relationship between the singular pieces of information. That restaurant owner may know to do their biggest stock on a Wednesday as analysing their covers they can see Thursday is their busiest day.
The pace of business in today’s technological times requires businesses to be able to react quickly to changing demands from customers and environmental conditions. The ability to be able to compile, analyse and act on data is increasingly important. In some instances, high volume of data may need to be accumulated and analysed before trends and patterns emerge, like a particular season’s most popular dish.
Unfortunately, many businesses are not comprehending the power that comes from understanding their data. Ignoring investing in compiling accurate business data entails business owners will continue to rely on gut feel and assumptions about past performance to inform future business decisions.
If you’re business is already using cloud software such as an accountancy program, project management system or even a CRM system you’re likely sitting on a goldmine of data. If properly utilised, this data can greatly aid running a successful business. These cloud systems offer you invaluable insight into your sales, expenses, profit and staff efficiencies that can help you answer critical questions and drive smart business decisions.
Of course every business is unique, but here are three ways you can start to use data to drive your business.
Data is only powerful is context, so stop and answer some simple questions for yourself.
- What is your primary objective (business or personal)?
- What is happening in the business?
- What isn’t happening?
- How can you influence what happens?
You need to figure out what you’re currently trying to do before anything else. It’s important to periodically go back and ask yourself these questions and what goals develop from the answers, as answers evolve over time. You may’ve started out with your primary objective as running the best restaurant in your area. However as time went on, now your primary objective could be to be able to take time away from the business to spend more time with your children.
The only way your data can help you drive your business is if it’s accurate and organised appropriately.
- Are your financials up to date?
- Do you have any unreconciled transactions?
- Are you tax compliant?
- Are your staff trained on what systems and processes to use for different parts of your business?
- Are your cloud systems being correctly utilised?
The worst thing you can do is to attempt to analyse incorrect data and attempt to make decisions for the business based on it.
Understand what is the necessity and what the niceties are terms of data and focus on those first.
- What would you most like to understand about your business?
- What figures pinpoint success for you?
- What are your objectives over the next six to twelve months, two to five years?
Remember, to focus on what truly matters and build from there as and when you need to. Lastly, if you want help with this process look at some of the great accountants out there that can accumulate, analyse, report and advise on your data for you. Alternatively, take out a free trial of Spotlight Reporting and create powerful reports for your business.