Most small businesses end up failing, but yours hasn’t. So why would you consider changing how you’ve done things and introduce something new like analytics into your already successful business? Fair question!
In the graph below you can see that even between 10 and 15 years of being open, 10% of business end up failing. So even more mature new businesses are still at risk of failing.
As you’re already well aware, the key to continuing a thriving business is evolving and changing. Social media is a great example. 20 years ago, social media didn’t exist. But today its now used by the vast majority of businesses. Analytics is a tool to help your business in 3 major ways.
- Increase speed of decision making
- Increase quality of decision making
- Scale/streamline processes
Increase Speed of Decision Making
Things in business move at 100 mph. If you’re the owner or a major decision maker in a business, you’re often asked to make decisions as quickly as possible to capitalize on an opportunity. What if there was a tool to help you make those decisions even faster? There is and it’s called analytics.
A skeptic may say something along the lines of “won’t adding something to the decision-making process slow it down?”. Fair point, however when correctly implemented, analytics will speed up your decision making.
The main way analytics allows for increased speed of decision making is by taking a lot of information and digesting it. What if to make a decision, you need to understand current sales, future forecasted sales, previous ordering history, and anticipated shifts in purchasing behavior? By capturing the data for this and applying analytics to it, you’ll end up being able to make a quicker decision than you otherwise would have. The speed of decision making comes with a major caveat though.
The speed of decision making is most relevant with common and repeated decision making. If you’re having to make the same type of decision on a recurring basis (sales expectations, inventory purchasing, marketing spend, etc), then you’re able to set up an analytics process to “automate” this decision making process.
I use the term “automate” loosely here, as its usually still recommended for you to put eyes on a decision vs. just letting the analytics be the sole decision maker. By leveraging a hybrid approach, you’re able to reduce the time required to think about highly complex situations, while also keeping your insights and knowledge of a situation included in the decision-making process.
Increase Quality of Decision Making
This is the most universally beneficial quality of analytics, regardless of your type of business. Analytics adds another perspective that is often times more objective and able to handle more complex situations better than humans can. To be clear, the goal isn’t to replace you or others in making decisions, its to combine them to generate a higher quality decision. We have an another post on this topic if you’re interested in going really deep into the topic: 1+1 = 3, The Value of Combining Business Knowledge with Analytics in Decision Making.
When using analytics to improve decision making, I like to view it as an extra employee that you pay little money for, never needs a break, and continues to learn new information at an incredibly fast rate. The cost and benefit trade-off for the impact of analytics is often easy, particularly when dealing with decisions close to the financials of a business. Say you’re working on analytics specific to your marketing spend. Your annual budget is $5000 and you don’t want to increase the budget, but want to get more sales out of your marketing efforts. You can evaluate your previous marketing efforts to understand where you’ve had the most success, allowing you to put an emphasis on those successful marketing channels over others that have been less successful. When making these changes you’ll often have an idea of what impact these changes will have before even making them. If you haven’t addressed this type of optimizing in the past, you may be surprised with the extra value you can get without changing your budget.
Many analytics tools and techniques have a secondary benefit that can end up being highly valuable for some businesses. Leveraging code can be a very powerful tool to remove manual and repetitive tasks, allowing your employees to spend time doing other tasks within the business. Copying information from one format to another is a good example of how code can be leverage. If an employee is taking information from a PDF and putting it into a spreadsheet, this type of task can be streamlined to be done much quicker, reducing the amount of time an employee needs to spend on it.
Even if you’ve be running a successful business, leveraging analytics can still be a powerful tool to build upon and continue your success. The value a business can get from analytics will vary from company to company. Regardless of the industry or type of business you run, decision are made, so increasing the speed and quality of decision making is valuable. Additionally, most businesses have processes that could be streamlined, allowing employees to focus on other tasks within your business.
Interested in talking more about how analytics could help your business? Reach out to me at firstname.lastname@example.org and we can have a conversation about where analytics may be able to add value to your business!