I’m often asked what is the most important thing for running a small business. This question comes from both established businesses and startups. I always answer with the same response. Data.
People often say it’s a chore and a burden to complete a quarterly Business Activity Statement (BAS). In fact, looking at certain figures should be compulsory for small business on a weekly and monthly basis.
Without clear knowledge from your business’ data you may as well just go to the casino and put everything on black!
Gone are the days where you needed someone to analyse and collate all your business data. ‘Business intelligence’ tools were once so costly only the big boys could afford it. But with cloud software just about any business owner can have everything they need on a few dashboards.
For accounting (Xero), job management (GeoOP), staff rostering (Deputy), inventory (Unleashed), point-of-sale (Vend), etc. you can have everything you need at your fingertips. Combine that with automation tools such as Geckoboard or Grappster and you have both big picture and detail about your business with just a few clicks.
Data also needs to be timely. You should be looking at up-to-date figures not something that is three months old or later. I’m not just talking about a profit and loss report or balance sheet here. Yes, they are great at showing you profitability and some trends but they make up only a small portion of the entire picture.
Cloud software tools give you up-to-date data to streamline your business and can make such a huge difference.
So what are some of the things data can provide in your business? If your sales are based on an hourly rate have you ever stopped to look at your average hourly rate, including all hours worked as well as charged?
Have you looked at which clients are profitable and which products are profitable?
Have you compared your sales staff or production output between team members? Have you measured your conversion rate for new enquiries?
These are just the tip of the iceberg when it comes to things you should be tracking in your business. Without data you are just flying blind.
We have seen businesses who start monitoring data with cloud software complete on average another job per day, increase average hourly rate by 35 percent, increase the overall margins on products and reduce staff wages as a percentage of sales.
See, what you measure improves. It becomes a focus and you look for ways of improving.
So how well do you know your data?
This is an edited version of a post on the Growthwise blog.
