The best decisions that we make as entrepreneurs are by listening to our gut, but here’s the thing—it doesn’t help us when we’re moving into the unknown and when we’re digging into things that we don’t have experience in. When you’re in that situation, you can’t trust your gut because your gut doesn’t have any frame of reference. To make those types of decisions, you need to leverage business intelligence, data, and insight.
Business intelligence, analytics, and insight may all seem to be fancy words, but what they basically come down to is making decisions that are driven by data you can trust. This is actually a little bit challenging to do but probably easier than you may think.
In growing your business, you will certainly hit a point where you need to make a financial decision, you need to take a risk, you need to make an investment, you need to finance something, or you need to do something. You’re going to call your CFO or your controller. You’re going to sit down with your accountant. You’re going to actually run through the numbers because your gut says, “To make this decision, I have to rationalize it with a business model.”
Our company is expanding very, very quickly. And I need to bring on a lot of team members. I sat down with my controller, and I said, “Okay, let’s run through the numbers.” We leveraged three-year trailing data, and then we forecast our growth. We leveraged numbers and business intelligence to make very smart decisions. I know exactly what I can afford to spend to grow this team without putting the company at risk. There are other areas of our business that have just as many data points. We need to take the time to ask the right questions, investigate them, and pull the data. That’s it. Any data point could be something that we can have learnings from.
When you’re moving into a new area or when you’re making a decision that you cannot simply trust in past experience, the very next thing you need to do is dig into research or business intelligence, which is just the numbers and things that are running within your business, such as your sales or your marketing for your advertising. You need to derive from those key pieces of insight. There’s so much there. If we just grab it and take the time to allow it to inform our decisions. However, most business owners don’t.
In my experience, I can tell you what holds most people back from this. First, most people aren’t aware of how to capture the data, what data is significant, and what not to capture. Of course, when it comes to your financing, you will look at your balance sheet, you will look at your P&L, or you will maybe run some forecast models the way that I have described.
What about our sales? Are we actually tracking sales the way we should? Most people don’t know their close rate. Most people don’t have an understanding of their different target audiences, their client size, or the indicators that would actually lead to a better sale or to a better client. Most people don’t know this data. They struggle to make decisions. Should you let Fred the salesperson go? If the decision is just to set a target and then hit it, that’s not enough data to be able to coach Fred to be better or to be able to set the next Fred up for success. That’s not enough to be able to increase sales in general.
Fred’s not doing well, but Gary’s doing well. Why is Gary doing better? Is he breaking the system? Is he doing things that are better? There’s so much information, insight or data that can be gleaned from this. You need to start tracking things. Look at your advertising and marketing. Every digital channel and even offline channel has the possibility to set up tracking. By tracking, you can attribute back to that investment so you become aware of whether or not it’s generating leads or business for you.
Take the time to set up the right tracking. Dig into what the numbers are saying, and allow that to inform you month over month, quarter over quarter, what it is you’re doing. It’ll generate more leads to generate more business with the same amount of spend. But that’s only possible if you’re tracking.
The worst thing that can happen in business is to say, “We thought this would happen, but it didn’t. We don’t know why it didn’t happen. We don’t know how to proceed.” It’s like we’re trying the next thing but at no point are we really digging into the key aspects that are keeping it from working. It might be an issue with the system or an issue with the tactic that most people aren’t digging deep enough into.
If you want to run the type of business that actually takes each one of these incremental improvements you can make by getting the right data and the right insight and acting on it, you would need to start leveraging analytics and insight and business intelligence across your operations, sales, advertising and marketing, and finance. I think most business owners look to finance for this stuff. But do you apply analytics and insight to sales, marketing, and advertising? Do you apply business intelligence to your operations? That’s what’s key. Have the mindset and be open to allowing data to inform the decisions you make.
The next part is tactics. This part is easy. You look at the areas of your business where you believe will help you make smarter decisions. So look for the natural data points that exist within the different parts of the business. If they don’t exist, create one that doesn’t introduce friction. Just create one so you can capture it.
Once you’ve collected data, you have two options in front of you. The first one is to make that data transparent. Share it with a lot of people. Let’s say a project came in and it took your team 90 days to complete it. But it should only have taken 30 days if you set the day it starts and the day it ends and simply advertised that internally. You can make that data known by having those two tracking points. If your average time of completing the project took way longer, you can fix the system. You know, people don’t like to be called out on why things are broken. However, you can change your operations. You can change your process. You can charge a lot more because you’re not losing money. Now in this longer project, you can make the changes to allow that 90-day window to make sense. However, you wouldn’t know that if you weren’t tracking those data points.
Your second option is to take this data, sit down with someone who has the experience to look at this data, and let that person interpret it for you. I’m not great at looking at financial data. I have a controller, and I have an accountant. My accountant has 40 years of experience being an auditor, and he can tell me based on all of his experiences, what he thinks of businesses my size. He can tell me what I should do with my investment, with my carrying costs—all these things.
I can take my data, and I can sit down with someone who has experience in HR and discuss why we have such a high turnover of staff. First of all, do you know that you have a high turnover of staff, or do you just feel like you do? Are you tracking the data? Like in my company, I know that if someone grew up in a country or a small town or if they’re an immigrant, they fit in really well here.
I don’t know if it’s my work-hard mentality or the culture or whatever it is, but if someone is like a super-suave downtown-type lead person, they just don’t fit in here. So how did I arrive at that data point? It’s really weird. It’s from experience. It’s from asking people. It’s from tracking people. It’s from knowing that when I want to go out and hire people, I’m specifically looking for people who have those data points.
Collecting this data, making it transparent, and then sitting down and figuring out how to make it work for you—this is literally magic for businesses that have never done it before. They are blown away by the ease that they can make decisions and the confidence they have in moving really quickly. More than anything, it removes all those frustrations, all those worries, and all those things that kind of piss us off because we feel like things should be different. The decisions that come from the data and the actions we take from the data manage all of those things. Leverage this in your finance, and do it right away. Use this in your sales, your marketing, your advertising. You have to be leveraging this right away. I would say the holy grail is the operation side.
Why does FedEx know that taking the time to turn a key in the truck costs money than replacing the keys? Constant turning wears out the keys, and it slows the drivers down by mere seconds. So they go ahead and put in fobs. That way, the trucks will start immediately at the push of a button. Moreover, these businesses know that doing only right turns saves so much time. So they lay out their plans for their routes through only right turns so that they will not have their drivers do any left turns ever. That’s pretty crazy stuff, right? That’s the operation side.
Whether you’re tiny or huge, whether you’re really successful or not. By tracking the data points of your business, looking into them, and fixing your operations so you can increase efficiencies, we can find tons of savings, and you can make life easier for your team and your customers. Focus on finance. Focus on the data that happens within your sales, marketing and advertising. Start leveraging them to make your business better.