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What's Your Business Telling You?

How to make sense of the information you already have
March 4, 2010
URL: http://www.entrepreneur.com/article/205336

To many small-business owners, the facts and figures their daily work casts off are more incidental than instrumental. Reluctantly storing it all on disks, in file cabinets and on scraps of paper strewn about the back room, business owners often think this constant stream of information is useless (except maybe to the IRS). They see it as a burden, another onerous management task in a work day that is already too short.

What they don't realize is that they're sitting on a gold mine. Almost every piece of information that a business produces is important, and can be used to boost sales, fatten margins or increase customer loyalty. From transactions to inventory to shipping costs to customer data, small businesses are starting to learn that mining business data for insight is not just for major corporations anymore.

Data can tell you whether your store hours are ideal. It can tell you if you're charging too much for some products and undercharging for others. And it can tell you who your best customers are and why. Taken together, all this business information tells an important story, one that can and should make a major impact on how you run your company.

But there are some rules for collecting and utilizing business data effectively. Because it can be a time-consuming task, business owners need to make sure they are going about both gathering and analyzing information the right way and achieving the right results. Here are some basic guidelines:

The software and various other tools you can use to collect and analyze your business data are too numerous to list here. There are thousands of custom software packages built for every industry under the sun. There are so-called "business intelligence" software suites that can be applied to nearly any company. And there are good old-fashioned spreadsheets, which are far more powerful and useful than most people realize (I highly recommend taking a course to familiarize yourself on the features of these applications).

Which software you use is less important than your approach to data gathering and analysis. So set your goals, collect good, clean data, and take action on that information.