What You Need to Know About Data Modeling

What You Need to Know About Data Modeling
Image credit: Illustration by Jason Lee
Magazine Contributor
3 min read

This story appears in the January 2013 issue of . Subscribe »

Q: How can modeling boost my ?

A: Data modeling refers to the organization of various databases (customer lists, inventory, sales history, etc.) into tools that help you use that information as effectively and flawlessly as possible. These customized programs, such as CRM and inventory-management services, are designed to make database information nearly idiot-proof to enter, then easy to slice and dice into a myriad of reports or to be used to find specific bits of information. We asked Chris Basham, co-founder and COO of TrackVia, a -based company that helps nontechnical users create online business applications, to give us more details on what makes data modeling good for business.

What's the biggest benefit?
No. 1 is that it codifies data entry across the company, which keeps everyone on the same page and reduces mistakes such as multiple people changing entries on a spreadsheet at the same time or working on an older, outdated version of a spreadsheet. As grim as it sounds, if you avoid data modeling, you're destined to end up with inaccurate information.

Can the data model grow with a company?
If you haven't done good data modeling upfront, your reporting is going to fall flat, especially when you start experiencing growth. If done right, it will easily scale and keep things humming. Consider this all-too-common scenario: A small startup starts tracking customers on a spreadsheet, then reaches the point where that's not going to work anymore. That's where data modeling comes in--where a CRM tool or inventory-management software replaces the spreadsheet and grows seamlessly with the company.

How does this affect the customer?
Here's an example I like to use: Say you call a company to seek help and you're immediately asked to provide your account number. With data modeling, the company has set up their system so they can find your account number via name and address.

OK, but can data modeling give me a competitive edge?
Certainly. I know of a small oil and gas industry service provider who used it to become an industry leader. Their niche is helping exploration companies secure permission from landowners to conduct seismic testing. As you can imagine, figuring out who owns what land is a headache--often one person will own multiple scattered parcels--and the company's spreadsheet system wasn't working well. But after implementing a well-thought-out data model, this guy was able to connect disparate title information to individual owners and make a quantum leap in successful deals. As a result, the provider quickly became the go-to guy in the industry.


More from Entrepreneur

Get heaping discounts to books you love delivered straight to your inbox. We’ll feature a different book each week and share exclusive deals you won’t find anywhere else.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Create your business plan in half the time with twice the impact using Entrepreneur's BIZ PLANNING PLUS powered by LivePlan. Try risk free for 60 days.

Latest on Entrepreneur