Tackling the Challenges: Why Analytics Are a Small Business Game-Changer
This week is the opening week for my favorite spectator sport—NFL Football. I enjoy watching millionaires pound on each other, from the football hike to the blow of the whistle indicating the end of a play through four 15-minute quarters where one team will be declared the winner by scoring more points than the loser. The end result is that black and white.
It doesn’t matter if, statistically, the losing team outplayed the winning team; all that matters is who had the most points. A tied game only means there was no winner. At the end of the regular season, it’s the teams with the best division records plus six wildcard winners that are advanced to the next level of play, with only one team at the end of each season hoisting the Lombardi Trophy as NFL World Champion.
Consider how strong “analytics” has become foundational to winning a Super Bowl. Factors like talent, coaching, and execution remain vital, with sophisticated analytics like the following now acting as a force multiplier, enabling teams to make more informed decisions and maximize their chances of winning the Super Bowl.
- Game Planning & Strategy: analytics are used to identify opponent weaknesses, predict play tendencies, and optimize play calling for higher success rates.
- Player Evaluation & Personnel Decisions: analytics are used to provide objective assessments of player performance and potential, guiding roster construction, pay structures, and draft strategies.
- In-Game Adjustments: real-time analytics are used to help coaches assess the effectiveness of their game plan and make necessary adjustments during the game.
- Injury Prevention & Player Health: analytics are used to identify players at risk for injury and optimize training programs to improve overall health and performance.
The use of analytics in professional sports provides a competitive advantage through data-driven insights that inform strategic decisions throughout the season and on game day. What I don’t get is why small business owners don’t embrace and effectively utilize analytics to improve their ability to generate higher sales and profits. Below are some insights into why this happens:
- Perceived Lack of Value: too many business owners fail to see the immediate value of analytics. They get lost in the day-to-day running of their business, never appreciating the necessity of analytics to making more money with less stress.
- Fear of the Unknown: for most business owners analytics requires new skills in data collection, analysis, and interpretation. What they miss is that these skills are easier to develop than the knowledge they have mastered in making what they sell.
- Data Accessibility and Quality: collecting and organizing relevant data is anchored by timely and accurate transaction recording. Too many business owners make this complicated by not staying on top of their transaction recording. Do this right, and you have the initial infrastructure needed to put your data to work for you.
- Overwhelming Data: too many business owners don’t know where to start with the information already available to them. What they miss is how easy it is to identify key insights and translating them into actionable strategies by converting their financial statements into variance reports.
- Limited Resources: most small businesses operate with tight budgets and limited staff. They misperceive the need for dedicated analytics personnel or expensive software. If they are using an accounting system to record their business transactions they have the start of a game-changing analytics infrastructure to make better decisions.
Business owners who have achieved financial freedom through business ownership don’t have dedicated analytics departments with significant resources like professional sports teams. What they have done is prioritize data-driven decision-making grounded in their financial record-keeping processes.
Want help converting your transaction data into the start of a business intelligence system?
Click here to talk with a BusinessCPR™ Business and Financial Reporting expert to learn how best to start applying the benefits of business intelligence to your business. Will help set you up with a couple of “free” user-friendly tools relevant to your business and show you how to use them to make informed decisions that will help you unlock higher profits.
