Who would you say has a better chance of becoming data-driven: small or large businesses?
You may be surprised.
Despite having fewer resources, small businesses have the advantage here. If you’re a small business, you can change your systems to become data-driven faster. You can be agile, bendy, and quicker on your feet.
When it comes to data, all businesses have the same goal: collect, collate, analyse it, and use it to inform business strategy.
It’s very possible for small businesses to use data to greater effect with less effort than large companies, which are often bogged down by legacy systems and protocols.
Armed with the right technology, you can do anything.
Even without an IT team.
Let’s show you how.
This article focuses on the first step to becoming data-driven: data collection. Keep an eye out for my upcoming guides on data integration and analysis.
One of the easiest ways to start collecting data is to go digital. If you’re using printed statements and receipts to keep track of finances (and yes, there are many who are), switch to Quickbooks, Xero or other accounting software that keeps track for you.
Financial data indicates the health (and ultimately, the survival) of your business. At any moment, you need to know exactly where you stand financially, so you know what to do next.
If you’re using many different bank accounts, credit cards and payment systems, you’ll need a way to aggregate that information in one place. This is, again, where accounting software can help.
We like Xero’s App Marketplace, which allows us to connect other software we use for payments, payroll, inventory, CRM, etc. Aggregating it all in one place helps us visualise and understand our data better, with far less effort involved.
It's worth transitioning to cloud accounting software just to take advantage of the data integrations available. It will give you a headstart to becoming an efficient, data-driven organisation.
Most people think the purpose of a website is to market their business. And they’re right. However, many overlook another crucial purpose of a website: to learn about customers.
If you had a physical store, and someone walked in, you’d ask what they're looking for then help them find it, right? Think of your website as an online storefront and use free tools like Google Analytics to find out how visitors are interacting with your site.
All of this information will help you understand your target audience better, and how to improve your website to ensure they find what they need straight away.
I like to think of SEO (Search Engine Optimisation) as the online equivalent of asking someone, "What are you looking for?", and a great way to gain insight into the needs and motivations of your customers.
Tracking what people are clicking on can be even more effective than interviewing them to find out what they want, because there’s nothing more telling than a person’s actions.
This is the essence of data-driven marketing — doing more of what leads are converting on, and less of what they’re not.
Many business people are so focused on making sales, they don’t spend enough time tracking and analysing them.
Remember, POS (Point of Sale) tools are not just helpful in making credit card transactions easier, they're a great way to collect sales data. Companies like Clover make integrated POS systems that not only improve the retail experience but also collect data more efficiently, saving you the hassle of retyping or scanning in sales reports.
In the same vein, B2B businesses can use CRM software like Hubspot or Salesforce to keep a record of customer communications. Over time, this data holds invaluable insights to learn from.
Collecting sales data through digital interactions with customers provides concrete information on which to base your sales strategy, which often produces better results than relying on gut feel alone.
We have discussed three sources of data to collect here: financial accounting, website traffic, and sales. Nailing these three is a great place to start for any small business, and will get you well on your way to becoming a truly data-driven organisation.
In my next articles, I will show you how to aggregate this data and use it to generate insights for your business.
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Unlike numerous other professions, minimum qualifications don’t exist for entrepreneurs, and for good reason: markets thrive on innovation, not conventional thought.