Using data to make growth decisions

There can be several factors you need to take into account when you’re planning for the future, and it’s increasingly easier to use data to make better decisions about everything from product development to staffing needs to cash flow management.

It’s also important to be able to make decisions quickly as well as accurately, with information now readily available in real time such as your accounting data. This data will help back up what you might feel intuitively.

Sources of data

Accessing accurate data is critical and the type of data depends on the source.

Common data types include:

• Sales and profitability data information such as seasonal fluctuations, products that sell well and those that don’t, which services are more popular than others and which methods work the best. For example, are you selling more online than you are in-store? Knowing exactly which parts of the business are growing for you to focus on, is better than an educated guess
• Customer data and buying behavior, loyalty, sales volume, repeat sales
• If you offer credit, how reliable customers are at paying their bills
• Market trend data about what’s happening in your industry. You need to understand what’s happening in the marketplace and your share and position in it, from current research data, industry whitepapers and any statistical data you can find
• Website and social media data to keep track of how many website visitors and social media followers you have, along with how many of those become customers. Google analytics can provide that information about your website, and most social media platforms offer a similar service, such as Facebook analytics. Knowing where customers are coming from will help you know where to put your growth resources.

Data collection methods

It’s vital you implement a good data collection system. It will give you specific, structured information, which makes the analysis of the data much easier. You can view the information in concise formats such as histograms and graphs, as well as being able to filter and choose which data you want to focus on for any given decision you’re making.

For example, if you’re faced with a decision around your financial position, you would extract data specifically about cash flow, profit and loss, and debt from your accounting software.

Cloud-based systems are making data collection for business much easier. For example, Salesforce offers Marketing Cloud, which not only facilitates data collection and stores it in the cloud but has tips on how to use that data to grow your business.

If you’re thinking about upgrading your website, it’s be useful to know:

• How website visitors find you
• How much traffic is being driven to your site through your social media profiles
• The amount of organic traffic from search.

The data you’ve collected might tell you that 30% of your visitors are accessing your site via a mobile device. But since your website isn’t optimized for mobile, they’re clicking away again and not becoming valid leads. If you’re losing 30% of your potential customers simply because your website hasn’t moved with the times and become mobile-friendly, the decision is a pretty easy one to make.

As another example, your sales data might be telling you that a particular product, one that you manufacture yourself, is selling well. You’re thinking about buying more equipment to scale and your data will tell you:

• Your current manufacturing costs per unit
• Which are your best customers to target for increased sales
• The sales trends and impact of seasonality.

Using this data, you can then work out if investing extra cash (and whether you should borrow it or source it internally) will pay off in sales, and when is the best time to invest.

Summary

Business owners should be collecting data about all areas of their business from the beginning. The more information you have, the clearer your insights will be and the better decisions you’ll make. Any ideas you come up with can then be analyzed based on the data you have available, so you can decide if it’s worth moving forward with that idea or not.