Big data has been all the buzz in the business world for more than 5 years. But how are organizations using that data to make better decisions and drive profitability? According to Forrester, 74% of businesses want to be “data-driven” but only 29% are actually successful at connecting analytics to action.
The good news is, making your data actionable isn’t actually that complicated. You already have all the numbers you need and you don’t need data analysts or expensive software to make it actionable.
Create a Data Habit
You already check in routinely with your key accounting numbers every day from inventory to labor costs to costs of goods sold. The difference between knowing generally if you’re up or down over the previous month and predicting why you’re up or down is what a data routine can do for you. Regularly taking a look at your financial analytics and tracking the same numbers over time will give you historical insight to allow you to set a baseline, identify trends, and give you actionable insight to make better business decisions.
Make it Visual
Data, information and insights are part of a pyramid that together lead to action. Data is the raw numbers in your accounting data. Information is prepared data that has been processed in some way to provide more context. Insights are generated by analyzing that information and drawing conclusions. A great way to transform your key data into information is to visualize it with charts and graphs. This allows you to see how your numbers change over time or in relation to other variables, such as chain promotions or customer satisfaction survey results.
Track External Events
Speaking of the passage of time or $0.25 wing Wednesday, your business doesn’t exist in a vacuum and neither should your data. For whatever frequency you set your data habit for, make it part of your routine to record any relevant external factors that might also be relevant to your financial outcomes for that period. Was there a PR disaster at a different unit? Did your franchisor run an ad spot in the Super Bowl? Maybe the high school partnered with you for a fundraiser that week. Tracking external events alongside your accounting data will take your information to insight allowing you to predict what effect seasonality, events and promotions might have on your business.
Test and Reassess
Once you discover the correlation that every time you staff Jeremy your doggie day care package sales soar, you can experiment with the variables and see how changing them might affect your accounting numbers. Maybe Fridays, the day Jeremy always works, are just a popular day to buy packages, or maybe Jeremy has a better delivery of your sales pitch. Testing these hypotheses and reassessing the data will let you know if you should prompt more customers to renew their packages at the end of the week or if you need to consider staffing changes to move star employees into training roles.
Share the Results
Nothing brings a team together like rallying around a common goal. Sharing your data insights with your employees will motivate them to participate in what’s been identified to help the business succeed.
Creating actionable data from your accounting numbers can seem overwhelming, but it doesn’t have to be. The key steps to true insight comes from creating a data habit, transforming it into information, testing your hypotheses and sharing the results with your team.
By: Laura Wright