Data is the lifeblood of any business. Those hard numbers will be your North Star, the guiding light that takes your business from one point in its journey to the next.
But there’s a problem: too often this data goes unutilised. Data is often only critically analysed after any damage has been done. If something fails within your business, it’s good to understand why. However, data can, and should, be used as a proactive, preventative measure rather than something to explore in hindsight.
Not only can data help you overcome any potential hurdles, but it can maximise efficiency, competitiveness, and ultimate success in today’s business landscape.
The importance of data-driven decision making
Businesses today exist in an incredibly data-rich environment. You can gather data on almost anything; from your financial figures to your staff satisfaction, and client attrition rates to whether the smell of your shop entices consumers.
Data empowers business owners to make informed, strategic choices that lead to better outcomes and sustainable growth. Not only can you learn from what works and what doesn’t work, but you can also understand trends in your data which help you plan ahead.
Data doesn’t just allow you to plan ahead, it can help you pivot quickly in difficult circumstances. During the first lockdown of the COVID-19 pandemic, one in five small businesses saw a 70% decrease in income. No one could have prepared any business for this level of disruption, but data enabled many to pivot and change course to ensure they didn’t continue to suffer as further lockdowns were announced and financial turbulence continued.
Whether it was operational changes, adapting how they worked, or improving product lines, the pandemic made businesses look at things differently. By analysing broad data, such as the huge increase in online trade as we all stayed at home, many could continue to trade by investing elsewhere in the business, such as an improved e-commerce site.
What insights you can gather from financial data
Your financial data offers a treasure trove of insights into your business’s wellbeing, performance, and strategic trajectory. Through metrics like gross, operating, and net profit margins you can evaluate your profitability and explore growth patterns which, in turn, will influence decisions on expansion, investment, and how much risk you want to take.
Each set of data allows you to see how well your business is performing but, more importantly, highlight areas that need improving. These inefficiencies can then be effectively streamlined through better allocation of resources – whether that’s human, financial, or technological.
However, your financial insights don’t just teach you about your own business, they’ll teach you about your customers’ preferences and behaviours too. Seeing trends and seasonal fluctuations will allow you to tailor products, services, and marketing efforts to meet specific needs.
Financial data is also important when looking to raise capital. Insights into return on investment (ROI) and risk profiles are studied in detail by lenders and investors who are trying to gauge creditworthiness. Break-even analysis, for example, unveils the sales or production threshold needed to cover all costs and achieve desired profitability. Having these in order and with the sufficient data will put you in good stead and help fuel your growth plans.
How we support customers to understand their data
Our mission is to get the best out of you, for you.
Our team of Fractional Accountants will comb through your accounts, cleaning them up, compiling them, and presenting you with ways to move in your desired direction. We’re not here to just present the numbers and leave you to figure it out, we come on board and help guide you through our findings, working with you to shape your future with both financial and business expertise.
If you’d like to know how we can support your business success through data and insights, speak to the team today.