From the websites we visit the number of steps we take while wearing a smartwatch, it seems like everything we do today generates data and is tracked by someone. In fact, we live in a world that’s flooded with data, and businesses that know how to collect and analyze data properly are more likely to succeed.
Usually, terms like data analytics and big data are reserved for large, enterprise-level corporations. But small and mid-sized businesses can leverage similar approaches, even if their operation doesn’t demand sophisticated data collection and analytics. Let’s take a look at some of the essential data your business should be tracking and how you can use it to your advantage.
Inputs, Outputs, and Outcomes
Before we delve into specific things you can track and analyze, it’s important to understand that businesses basically have inputs, outputs, and outcomes. Inputs are what you put into your business, outputs are what your business produces, and outcomes are the result of the process that turns inputs into outputs.
For example, inputs include things like your marketing budget, employee salaries, and time spent on tasks. It’s important to note that while not all inputs are financial by nature, they do have a financial impact. In other words, it’s important to understand the financial equivalent of those things that do not immediately carry a value.
Outputs include things such as leads generated, number of sales, revenues, and number of products produced (if you’re a manufacturer). Outcomes include things like customer satisfaction ratings and profit.
When thinking about the data you should be tracking for your business, it’s important to identify which of these three categories your data falls into.
There’s an old saying in advertising that goes, “Half the money I spend on advertising is wasted. The trouble is I don’t know which half.” This might have been true in the 1800s when it was first said, but it’s a very different story today. Thanks to the digital nature of marketing, nearly every aspect of your marketing operation is trackable.
In addition to your marketing spend, it’s essential to track and analyze where you’re spending your money and whether that spend is resulting in a positive output (leads, sales, etc.). It’s important to understand how your marketing campaigns are performing, and that includes monitoring them while they’re active. In other words, are they generating the outcomes expected?
Keep in mind that today’s buyers and consumers are inundated with advertising and marketing messages. Not all channels perform equally, but that doesn’t mean they don’t contribute to a positive outcome. For example, a customer might see a tweet about your product, but click on a Facebook ad to buy it. That doesn’t mean the tweet was useless, and it may have moved your customer closer to buying it.
Cash is king in any business, even in today’s digital world. That doesn’t mean you need to have stacks of bills hidden in a mattress or even sitting in your bank account, though. It means that your business needs to be cash flow positive, meaning you have more money coming into your business than going out.
Unfortunately, this data is sometimes hard to get at, as financial data tends to be split up among different systems. For example, you might have an invoicing system that shows what you’re bringing in, but that doesn’t tell you much about what you’re spending.
To appropriately track this data, it’s important to find an accounting system that will help you see both income and expenses, and how they relate to each other.
Time is money, as they say, and the more time your workers spend on projects the more expensive they are, generally speaking. Even if your firm produces products, you likely still have ongoing projects that need to be monitored, tracked, and evaluated.
That said, tracking may be a little varied depending on the type of business you have, the type of projects that are going on, and even the people involved in the project. A good project management system can help you track tasks and the amount of time involved. If you want to get the most out of this type of data, you need to set some benchmarks, which might take a little trial and error to get right.