Understanding Business Analytics: A Guide for Small Business Owners

Understandably, at the sound of the word “analytics” many small business owners’ eyes may well start glaze over and they quickly find something else, anything else, to do. Business analytics is one of those terms that sounds extremely technical and gives the impression that you probably need a Masters degree to even start to understand what it is, let alone how to do anything with it.

Whilst admittedly, analytics for your business does have the possibility of certainly getting quite complex, on the other hand, it doesn’t necessarily have to be that way.

Perhaps more importantly, no matter how daunting it may seem, at least some degree of business analytics is crucial to the ultimate success and growth of every business.

What is business analytics anyway?

Business analytics refers to the process of examining and analysing data to discover patterns or trends. Once the patterns and trends are identified, the information is used to draw conclusions about the effectiveness or success of current processes or activities and to make informed choices about any improvements or opportunities that can be made as a result.

Let’s look at what that means for business analytics in a practical business application.

In it’s simplest form, business analytics is all about measuring what you are doing and then assessing those measurements to see if it is working in the way that you had intended, or not. If it is working, then you are able to know with some kind of certainty and a factual basis that you are on the right track and then take action to maintain, and improve upon, the current status. In the event that it is not working, you can try something else, then measure and assess the new approach and continue to adjust, measure and assess on a regular basis with the view to working towards fostering the effective and efficient practices and reducing or even eliminating the activities that are not bringing value to your business.

Analytics for every part of your business

The practice and process of analysing data in your business are not confined to any one particular area. Some of the more obvious business functions that you might regularly analyse include accounting transactions such as income and expenses and this would usually be done with some kind of accounting software system.

Just as you would look at the financial figures and then make decisions and take actions based on that data, you can also cast a similar magnifying glass into any other area of your business. Whether it is marketing, sales, customer service or production and operations there is so much information available within your business that can help you to get an indication of the current status and then make informed decisions as to where to take things next. It is a matter of when and how you capture and collate that data, and importantly whether you are actually collecting any data at all, that makes all the difference to how efficient and effective the analysis process is.

Endless business analytics solutions

Like there is software to help with capturing and analysing your accounting data, there are endless pieces of software that are specifically designed to help you look at the data for any other business function that you can think of.  Much like any product type in today’s world, there is a vast range to choose from. Each type of software will have basic options, right up to the “Rolls Royce” and even within each individual piece of software, there will likely be tiered options for you to customise and scale the product to best meet what you need. Most vendors offer free trials so that you can sample the product and “have a play” to see if it is suitable before you commit to purchasing the product or a subscription.

The ultimate goal is to be able to bring as many pieces of data as possible into one place so that you can quickly view and compare the status of multiple items at any time. Whilst there are some amazing pieces of software out there that claim to offer a combined solution, and many of them do very well at combining a number of related business areas or functions, unfortunately, it is unlikely at this stage that you will find a package that has absolutely everything that you need in one place. But that doesn’t mean it’s all too hard and you should do nothing. On the contrary, it is a matter of selecting the products that best meet your needs and will help you to be able to track the data that is important to you for your business.

Business analytics tools help you to compare real apples and real apples, not hypothetical fruit salad

The benefit of a systematic approach to business analytics is that it allows you to have solid and real data on which to base your decisions. As opposed to an “impression” or “feeling” that you might have about a certain aspect of your business. In other words, the data that you are looking at is “real”. Additionally, there is a great benefit in using the same tools and metrics to measure the types of activities in a particular area of your business. This approach can make it much easier and more beneficial to compare the related data (this is where you are looking at “apples” and “apples”. Granted, sometimes the apples might be cut a little different, or sometimes you’ve got a Red Delicious and others a Granny Smith but there will always be a commonality with a slight variation on the theme.) Without a systematic approach, attempting to digest and draw conclusions from lots of different pieces of mismatched information is like trying to compare a punnet of strawberries and a bunch of bananas and expecting the results to be similar. Of course, they are not the same, and nor do they need to. The outcome would be as equally unhelpful if you were attempting to draw a comparison or conclusion from seemingly unrelated aspects of your business operations or information that is not compiled in a consistent manner.

Business analytics for YOUR business

Now that you understand a little bit about the scope of business analytics and why it is important, it is time to think about what information is important in your business and why and how you will use that data to make effective business decisions. Once you have a clear understanding of the type of information you would like to see on a regular basis and the level of detail that you require, you can then begin the process of finding suitable solutions.

For some businesses it may be important for them to gather detailed customer and sales data such as how often a customer purchases, how much they spend in each transaction, how long it usually takes a salesperson to convert the lead into a sale or why leads seem to get to a certain point and then not progress. For other business types, it may be more important for them to look at the results of various marketing campaigns and analyze whether their email campaigns are having a positive effect on sales, or why they are getting lots of website visits and social media activity but they are not converting to sales. Or perhaps they’d like to measure production efficiency and easily be able to easily identify recurring issues in the production process.

Choose a point and start slowly

All of these things and more can be looked at using some form of business analytics tools. Whilst it may seem quite daunting and overwhelming when looked at as one complete undertaking, it doesn’t need to be. By breaking it down, prioritising and approaching one area at a time it becomes a much more feasible endeavor.

In all its diverse aspects, business analytics is a crucial tool in the success of any business, no matter its size or industry. This is definitely not something that will fall into place overnight. But with a committed approach to gathering all of the important data, that is more than likely floating around in your business anyway, you will no doubt soon start to see the benefits of an improved data flow and analysis process.

At Clarity Marketing and Communication we specialise in guiding our clients to implement the most appropriate marketing and customer-focused analytics tools for their business as well as offering our advice and experience on a range of other business tools. Contact us today to discuss how we can help you to get the most out of your business information with the right business analytics tools.