Running a business is like being on a journey that needs a constant direction change. Things are constantly shifting, from client tastes to factors of production that affect pricing, to suppliers. You’re almost always tweaking something just to maintain the status quo.
A good number of entrepreneurs react to these shifts in environment by solely relying on gut instinct and surface observations or what we hear. Unfortunately, working like this is more of an art than a science, and as much as a select few get it right, a good portion of the time, the majority make wrong decisions.
This is because the sources of data relied on are not exact and the analytics are limited – so you respond to the obvious in obvious ways.
Data analytics is the science of drawing insights from raw information sources. Technically, this is what you do as a business owner when you look at the trends your customers follow and respond to their needs.
Take a shopkeeper, for example. It’s common knowledge that mornings and evenings are the most lucrative times of day for those in retail. Such information can guide a shop owner to accept stock deliveries later in the day when foot traffic is low, thus causing the least disruptions to normal operations.
Lower cost
However, this thinking may be flawed because of the limits of our observation. We make largely shallow and narrow observations. The level of understanding we’re able to reach isn’t very thorough, and often what seems like one thing can be another.
Take, for example, a shop that sells milk, bread and mandazis. When the shopkeeper notices that milk sales are increasing, they may assume that sales of bread will also go up, so they stock up on bread. However, in an estate with a young population that prefers mandazis, the extra bread could go bad as customers choose mandazis for breakfast instead.
This is the kind of information that, once captured and automated, reveals trends with depth.
Data analytics, though, has always sounded like something done by big corporations. But with businesses like Google, Facebook and even Microsoft investing heavily in big data and providing easier and cheaper access to analytics on their platforms, small and medium enterprises can now reap the benefits afforded to big corporations at a fraction of the cost.
Google Analytics, for example, is a free digital platform that analyses data and gives small business owners access to tools that analyse website traffic. This provides insights like where your clients are logging in from, which pages on your website are most popular, how long they stay on your site and so on. You can also get long-term analytics tools that enable you to spot trends that help you make wise data-driven decisions.
InsightSquare is another interesting platform that saves you the stress of having to mine data and painstakingly record it in Excel sheets before analysing it. This solution plugs into the most popular platforms, from QuickBooks to Google Analytics, to automatically collect data and extract information that can be acted on. The solution enables you to check on your profitability, discover business trends, and bring out your strengths and weakness, among other useful tasks.
