Three steps to ensuring data is meaningful for your business
Raw data describes the facts and figures that a business processes every day. Over time, every business hoards a certain amount of data and it only becomes meaningful to a business after it has been processed to add context, relevance and purpose.
For example, in a restaurant, every order will be recorded. However, a restaurant won't learn much by looking at each one in isolation. Digging deeper to analyse the orders will reveal trends and patterns, such as:
peak dining days
biggest-selling menu or bar items
Knowledge of the business comes from the relationship between singular pieces of information. For example, the restaurant owner may know that they need to place their biggest stock order on a Wednesday after analysing their covers and establishing that sales increase by 38% on Thursdays. In this way they can be prepared for the extra demand, to avoid running out of ingredients whilst only ordering extra stock when they know that they are likely to sell it, so that short shelf life foods and ingredients are used up and wastage is kept to a minimum.
Fast Paced Businesses
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, a high volume of data may need to be accumulated and analysed before trends and patterns emerge.
When you aren’t compiling accurate business data, you can only rely on gut feel and assumptions about past performance to inform your future business decisions.
If your business is already using cloud software for accountancy, project management system or CRM, it’s likely that you’re sitting on a goldmine of data. Properly utilised, this data can greatly aid running a successful business and even give your business a competitive edge. You'll be able to uncover valuable insight into your sales, expenses, profit and staff efficiencies that can help you answer critical questions to help drive smart business decisions.
Every business is unique, but here are three quick tips to help you drive data in your business.
1. Data is only powerful if there is context – can you stop to answer these questions?
What is your primary objective (business or personal)?
What is happening in the business?
What isn’t happening?
How can you influence what happens?
Figure out what you’re currently trying to achieve before anything else. It is also important to periodically go back and ask yourself these questions and what goals developed from the answers; as answers evolve over time.
Running the best restaurant in your area, may have been your primary objective when you first started your business. However as time has passed, your primary objective might have evolved to enable you to take time away from the business and spend more time with your children.
2. The only way data can give you the power to drive your business, is when it is accurate and organised appropriately – so ask yourself:
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?
*To help you check your Quickbooks or Xero financials, you can download our FREE bookkeeping checklist here ===>
The worst thing you can do is to attempt to analyse incorrect data and attempt to make decisions for the business based on it! GWA Accountancy uses a tool called Dext Precision with our clients, which helps them build the reports needed to make robust business decisions. Dext Precision ensures that business reports are based on trustworthy, accurate and complete data, as it alerts you to any discrepancies, including missing and bad data, so it can be addressed swiftly.
3. Understand what the data necessities are and what the niceties are.
What would you most like to understand about your business?
What figures pinpoint success for you (they are unique to every business)?
What are your objectives over the next six to twelve months, and two to five years?
Remember, to focus on what truly matters and build from there. If you would like some help with the process, we can accumulate, analyse, report and advise on your data; or show you the tools to use.