Small business owners have access to more data, analytics and technology than ever. With technology constantly offering new ways to manage your business faster, easier, and on the go, it’s possible to use this new digital data we’re creating to improve business operations. But many small business owners aren't taking full advantage of their data.
Sometimes we meet business owners who don’t know how to generate the kind of meaningful data they need. But more and more frequently, we’re seeing business owners who have so much data that they aren’t sure what data to use, and how to harness it for growth.
Learn how you can begin transforming your business into a data-driven organization, and what it will mean for the growth of your business.
What does it mean to be a data-driven business?
Being a data-driven business means that your company uses hard data and facts to drive their decision-making processes. This may sound obvious, but a lot of businesses still make decisions based on assumptions and opinions, or worse—based on incorrect data.
A lot of organizations have data available, but aren’t making use of it during important decision making. Being data-driven is more than simply skimming your stats when you have a spare moment. It means committing to using your data reports to understand, manage and grow your business. And it starts with you, the business owner. For your business to truly become data-driven, it needs to become a full cultural shift that you instil in your entire team, whether it’s you and a couple of contractors, or a growing staff of 100+.
How to Become a Data-Driven Business
First, take an inventory of your current data and analytics sources. When you’re first getting started, it’s important to not overwhelm yourself and your team with too much information. Start small, and then continue to look for new data that helps you fill in the gaps.
Being data-driven is not about absorbing as much data as possible—it’s about finding the data that works for you, for your company’s unique goals, and for your growth plans.
Streamline Your Data
It’s important to cross-reference your data and look at the big picture. If you’re looking at your company’s online presence and marketing data (social analytics, web traffic, etc) but not cross-referencing that with your financial data, you won’t be achieving a clear view of how your company’s marketing is really working for you.
Whenever possible, integrate the software and apps that you use to collect information. When your data is already working together, you’ll find understanding your business easier than ever. For financial analytics, we love working with Xero. They offer such a wide variety of app integrations and analytics options that allow you to manage payment processing, inventory, time tracking and reporting—making it easy to understand how the different elements of your business impact your bottom line.
Focus on Your End Goal
For most companies, becoming “data-driven” is not really a key objective for the year. Your end-goals will usually relate to your plans for growth, or your financial bottom line. Clarify what your business’ end goals are, and then work backwards to find ways that your organization can use data to meet them.
For simplicity’s sake, let’s say your end-goal is to have revenue of $1,000,000 this calendar year. You’ll be able to use your financial data to calculate how many new clients you’ll need to gain in order to meet that goal. Next, you’ll be able to analyze your Google analytics data, social media data and other marketing reports to see how many clients you’re currently growing by each year. You can then work backward from there to create a business and marketing plan to meet your year-end goal.
Bring in New Eyes
When you’re managing a data-driven business, you’ll find it easier to continue sourcing meaningful advice from your strategic partners and business advisors. If you’re able to walk into a meeting with your company’s full financial information on hand, advisors will find it quicker and easier to guide you than if you walk in with a story and some disconnected numbers.
At Enkel, it’s our goal to help empower business owners to make smarter business decisions, using the financial information they already have. If you’re interested in using your company’s data to propel your financial growth, let’s talk. Our team of bookkeeping professionals are happy to help you bring your business to the next level.