Data Management – Business Skill #8 To Take Your Business To The Next Level

One of the most common questions I get from entrepreneurs who are on the path of scaling their business is, “How do I keep growing my business without sacrificing quality? “

And the answer to that question and so many others lies in the data.

So today we’ll be talking about managing data.

This is number eight of the eight important skills for entrepreneurial success.

What Do I Mean By Understanding Your Data In Business?

So when I say data I am NOT talking about being a data scientist and a nerd all up in every analytic that you can find on the internet.

Instead, it’s much more about what is the information that you need to be able to make strategic decisions.

Using Instincts To Make Strategic Business Decisions

And early on in your business, I would say that the data is less important. Or at least the accuracy is less important.

Early on when you’re your first customer’s first year of business, you go a bit more off of “the feel”.

It feels like people are happier. It feels like sales are increasing. It feels like things are going better.

Using Data To Make Strategic Business Decisions

But as you get bigger and bigger, you’re going to be slowly removed from the day-to-day operations and therefore you need to have a more reliable way to see in black and white, what is going on in your business.

Oftentimes, I find entrepreneurs are actually freaking out that their business is failing and it’s doing really, really well.

Or they’re sitting back calmly like “Hey, I’ve got this” when in reality they should be freaking out because their businesses failing.

So having the data to look at as a scoreboard to help neutralize the emotions is very, very valuable.

What Are Some Examples Of Useful Business Data?

The data that is important to a business is individual to each company. Some of these examples may get you thinking on the right pathway though.

Financial

One of the most common is some of the financial reports from a business.

What does the profit and loss look like?

How are projections looking?

How was that in relation to what’s actually happening?

Sales

What are the sales numbers looking like as far as the conversion percentage?

Operations

What are the system outputs looking like?

Are we having the same errors over and over again, or are the systems we put in place solving those problems for our employees?

Management

What’s our turnover rate? How’s our management going?

Tracking Data Best Practices

These are ways to track things.

The general rule about tracking data is we like to start by tracking as general of an area as possible to start with and only get narrower and more detailed IF we need to.

That’s to avoid the complex issue of trying to track every single little thing.

In this day and age of analytics and data, you can spend tens of thousands of hours putting together numbers and percentages that actually DON’T affect your business.

So we typically try not to worry about that a lot until it is time.

When Your Business Becomes A “Black Box”

The other really important thing to understand about managing data is that as you’re more and more removed from your business, it becomes what’s referred to as a “black box”.

This is sort of any type of a thing that you don’t really know what happens inside of it.

So in this “black box”, you’re on the outside and it’s unclear how the gears are turning inside and what’s happening.

Indicators are a way to get data out of this black box.

Now, you can’t just ask your manager to tell you every single thing they did that day so you can micromanage and say where they went wrong because they lived their eight-hour workday will take them eight hours to tell you step by step every single thing.

So naturally, you compress that you just say “Hey, how did X Y, or Z go today?” and you get a much more compressed version of that.

But the more systematic you are in this process, the more you can actually get the exact specific indicators to find out what’s good or bad.

Systematically Tracking Indicators

So think about this concept using your car as an example. If you’re getting ready for a trip, you’d have to check a few things.

A few indicators are helpful for you to know how safe your vehicle is.

• What’s your tire pressure like?
• Do you have oil?
• Do you have coolant?
• Generally, does your car look like it’s ready to go?
• Do you have gas in the tank?

Those few indicators tell you a lot about the word readiness and the roadworthiness of your vehicle.

You don’t necessarily have to check

• If the seatbelt is shining or not.
• If there are crumbs in the cracks.

Those would be extraneous details that wouldn’t necessarily tell you information that you would need to know.

So these indicators in your business might be

• How was our utilization of the employee hours versus how many hours they could work? What was that like?
• How many sales calls did we do?

This type of information can basically give you a snapshot of how an overall entire branch of your business is going.

Actually USING The Data For Strategic Decisions

Typically you should be like the Maytag repairman week after week or month after month when things are going well.

But, when they’re not, now you’ll be able to see there’s a deviation.

You can notice that the sales were on track and all of a sudden they’ve spiked.

That’s great.

But what changed to make that happen?

Where the bottom dropped out – what changed to make that happen?

Being in tune with your data allows you to catch those fluctuations, so you can make these bigger strategic decisions.

So learning how to manage your data from even the early stages of the “feels like” level to where you have more concrete information is a really key skill to being successful in business.

Good Luck.