There has been talk for years about how big data available to businesses can help them make better decisions. It’s easy to imagine how a large company would have terabytes upon terabytes of information around its various systems, business units, and functions. But what about a small business — the one man bands or operations with a handful of employees?
You have more than you realize
You might be a small café, a take-away joint, or a medium–sized professional service business. And yes, on the surface, you might not have as many data points as the giant company down the road. But, if you scratch beneath the surface, you will find a lot more than you realise.
Even companies without the latest hi-tech gadgets are collecting useful data in some form. These days, you are probably gathering much more than you realise.
The key here is to look at all aspects of your business — from marketing, to service, sales, support, and anything in between. What elements of your business are changing regularly? It might be an item ordered, money changing hands, or inventory quantity changing. This is all potentially valuable data.
The easiest way to do this is to sit down and look at an average day or week for your business. Map out all the functions and figure out where you are collecting data that you can easily access. Ensure this data is being collected with as little manual effort or heavy lifting as possible. You want to have your software collate and present as much of this data as possible.
This information is often in disparate locations, or needs to be exported and brought into a common tool (such as Excel or Google Sheets) for analysis. This can take time, requires skills that not every small business has, and the data is probably out of date by the time the analysis is performed. This is why it’s vital to use software to do the heavy lifting for you.
How to use this data with the Business Performance Dashboard
There’s no point collecting all this data if you’re not able to do anything with it.
First of all, make sure you are presenting the data in a simple way. Xero recently released its Business Performance Dashboard, which collects and displays more than 23 business metrics for over 500,000 small business owners around the world. If your business has more complex analysis or reporting requirements, there are a range of tools available Iike Fathom, Crunchboards, and Spotlight Reporting to help you display and share your data. It should be presented in a simple way, that anyone in your business will immediately understand.
Secondly, ensure the right people have it. If your data is collected but sits in a spreadsheet on a server somewhere that no-one accesses, you may as well not gather that data in the first place. Figure out who in your business can make better decisions when armed with that data, and get it to them quickly and regularly.
Third, work with your advisers to turn that data into action. Your accountant or bookkeeper should know your business very well and are one of your most valuable allies. If you have gathered the right data that is relevant specifically to your business, and you get it to the right people, they will be able to make better decisions. As the business owner, your adviser can work closely with you to ensure this is all occurring seamlessly.
What’s the point?
Collecting, presenting, and sharing data in the right way will help you drastically streamline decision-making.
As an example, instead of going by gut feel, you can have detailed data and beautiful reports interpreting your aged debtor days. In simple terms, real time reports can tell you exactly how long it is taking for your customers to pay you. This gives you the information required to establish processes to collect money from your customers faster and ultimately improve your cashflow.
Importantly, this sort of efficiency helps small business owners punch above their weight. You could be an underdog in your industry, or going up against a business heavyweight. You might be new to the market, or you might be doing things a bit differently to the competition. By creating actionable insights from the data you are collecting, you are saving resources and time in the decision making process.
Think about it. If each time you need to make a business decision you waste time pulling together disparate data sets, speak to people to find out information, and leave some time for ‘umming and aahing’ before doing anything, you are wasting your own time and resources, and ultimately slowing down your business growth.
If you use data in the right way, you are engaging employees and advisors with a single version of the truth. You don’t need to waste your time (or someone else’s) by manually assembling data from many sources.
You can make faster decisions, make better decisions, and grow your small business faster than ever before.
Chris Ridd is Xero Australia Managing Director