By Sanjeev Kumar
Fast-growing small businesses frequently need to make quick but informed decisions, and access to the right information at the right time can mean the difference between making a good decision or a bad one. Small businesses typically have access to a goldmine of business data, but find it difficult to use it effectively to improve business efficiency and profitability.
Analyzing Small Business Data
Start analyzing the customer and sales side of your business by using the data that you have. Look around your business for sources of data such as spreadsheets, the small business software you use and your office documents.
Identify the few core metrics that your business needs to measure. Depending on the type of business you have, these could be cost-per-lead, lead conversion rate, the time to close each sale, referrals, customer retention rate, average transaction value and customer lifetime value.
Regular tracking and review of these metrics lets you make adjustments to your sales and marketing programs; adjustments that can help improve your sales efficiency, optimize the cost of customer acquisition and enhance your customer value.
You may find your own financial data to be equally insightful. Managing your cash flow is essential for a growing small business, and periodic reviews of your key financial metrics will make sure you stay at the top of your cash-flow situation, as well as know the financial health of your business.
The important finance metrics to watch include: burn rate, cash-in-hand, expected cash flow break-even date, collection cycle time, gross and net margins on each type of product or service, and planned goals versus actual performance.
Your operations data may also contain hidden gems that can help you gain insights into the current performance levels of your business.
The potential sources of such data could be your production processes, asset maintenance, logistics and customer service logs. Analysis of this data can help you answer questions such as: What is our order completion forecast? Which parts/systems fail the most? Which group of customers needs our support most often?
This information can help you take business operations out of fire-fighting mode and instead let you resolve operational issues that can lead to potential cost saving opportunities.
Your data is certainly your great asset, and it can be one of your best friends in the business if you can learn to use it the right way.
Sanjeev Kumar is product Manager for business analytics at iBE.net, which offers cloud-based business software for small to mid-size enterprises.
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