For a small business owner who is juggling sales, finances, customer service, tax returns and any number of other responsibilities, investigating the use of data analytics as a business tool is probably not at the top of the to-do list, or even on it at all. However, data analytics can be an extremely effective way of increasing profit and maximising cash flow, something everyone with an interest in balancing the books is keen to do.
Data analytics is the process of collecting and analysing raw data to establish insights which will in turn support informed decision-making; using information specific to your business to increase growth and profit. The stages involved in data analytics are:
- Data definition – defining the issue which needs to be solved
- Data collection – accumulating the necessary data
- Data processing – sorting and refining the data to ensure its accuracy
- Data analysis – applying statistical and mathematical procedures in order to discover insights
- Data interpretation – drawing conclusions from the data to enable informed decision-making
- Decision-making – using these conclusions to determine actions in the areas required
If you’re reading this as the owner of an SME, you may well be thinking that this is a far more complex process than your business needs, but data analytics can be an eye-opener in financial terms. The right information can lead to reductions in operational costs, more tailored marketing campaigns, the discovery of new market opportunities, improved efficiency, a better business model, and as a result of all these, substantial cost savings and increased profit.
Gaining a deeper understanding of exactly what drives your business’s success, and making important decisions based on thorough and accurate data, can only be a positive step. As an example, let’s imagine a small business importing bespoke Italian shoes. The owner has a great product, but she’s struggling to make headway in the market and profit margins are non-existent. How can data analytics help?
Having defined, collected and processed the data, the owner will have at her fingertips specific information about her customers which will enable a much more tightly-focused marketing strategy. This could include how people find out about the company, how long they spend on the website and which products they particularly home in on. It could tell her when traffic is highest or lowest so she could target special offers for particular times, highlight the sort of special offers people prefer, and find out the type of device people shop from, which could help inform future website design.
If interpreted correctly and followed up strategically, data analytics can provide a goldmine of information which could make all the difference to a healthy cash flow – in fact, the difference between business success or failure.
At AMR Bookkeeping Solutions, one of our jobs is to help businesses optimise their cash flow. If you need advice about any aspect of bookkeeping or payroll, why not call our friendly and helpful team? Contact us on 01892 559480 or get in touch by completing our contact us form.
