OK, before we dig into the good stuff, first a few stats for you.
The latest statistics from the Small Business Association (SBA) show that there are 33.2 million small businesses in the United States. These businesses account for 99.9% of all US businesses. So, basically almost all businesses are considered small.
The SBA defines a small business as one that has fewer than 500 employees. Now, you can see why there are so many defined as “small” businesses.
Of the 33.2 million small businesses in the US, there are 27 million with no employees, 5.4 million with fewer than 20 employees, and around 650,000 that have between 20 and 499 employees.
Whether you have a part-time side hustle selling boutique clothes online from your living room, or are a representative for a nail art company, or own a full-time t-shirt printing business, a convenience store, a tire shop, a graphic design business, a coffee shop, a freelance business online, a cleaning service, a barber shop, a mortgage company, an accounting firm, or any of the other millions of possibilities for small businesses…one thing is crystal clear…
If you’re a small business owner, you know how important it is to make informed decisions.
But how do you make sure you’re making the right decisions? That’s where data analytics comes in!
Today, we’re talking about the top five reasons that it’s critical for every small business to harness their data and turn it into meaningful information.
To demonstrate each of these five reasons, we’re going to use an example as we move through the steps.
Jenn owns a great little coffee shop in a busy neighborhood that gets lots of sidewalk traffic. This cozy little shop is called Jitters. Jenn opened the business of her dreams a couple of years ago and business was great for the first six months. But, then Jenn noticed a steady decrease in profits each month. She wasn’t really sure what the problems were. She was working even harder than ever, but couldn’t seem to get the profits to come back up. Jenn was advised to hunker down and take a look at her data. (Smart advice!) Here’s what she discovered…
Understanding Your Target Market
The data helps you understand your customers. By analyzing your data on customer behavior, preferences, and demographics, you can better understand your target market. Once you understand your customers, you can then tailor your products and services to meet their needs.
Jenn’s Example: Jenn realized that many of her customers were visiting her shop on the way to work at a healthcare clinic located two blocks away from Jitters. Those same customers would swing by at lunch for another dose of caffeine, too! About six months after opening Jitters, the healthcare clinic had been relocated to a spot that is a ten-minute drive from Jitters. After study, this explained a large portion of the reduction in profits. A big portion of her daily customer traffic had been eliminated because they can no longer walk past her shop. After the due diligence steps involved, Jenn worked with the healthcare facility and leased a spot to have a satellite Jitters location inside the facility. Her loyal customers were so happy! They began having their morning, lunch (and sometimes afternoon!) coffee again at Jitters and told all their coworkers to try it as well. This one strategic move tripled Jenn’s profits for the year!
Customize Your Marketing Efforts
Knowing your data helps you optimize your marketing efforts. With data analytics, you can track which marketing channels are most effective, which campaigns are driving the most conversions, and which messaging resonates best with your audience.
Jenn’s Example: Jenn worked to find other businesses in the Jitters neighborhood that could provide more foot traffic into the main location. She began marketing to five businesses in the area and monitored the results over 60 days. In reviewing the data, Jenn clearly saw the highest response rate from workers inside the Community Bank location. She doubled down on this location due to the large number of employees and offered rewards specific to the company. This increased brand loyalty, drove more traffic to the location and the corporate offices began using Jenn’s products for all internal meetings, as well. Jenn and everyone at Community Bank perked up!
Make Better Decisions
Analyzing your data helps you make better business decisions. By collecting and analyzing data on your financial performance, customer satisfaction, and other key metrics, you can make informed decisions that can help you grow your business.
Jenn’s Example: Jenn began asking for and receiving customer comment cards and messages online. She reviewed each carefully and implemented any suggestions that she found helpful. She also rewarded the person submitting the implemented suggestion with ten free coffees. This excited the customer, had them spreading the word on how great Jenn and Jitters are, and encouraged others to take the time to give helpful suggestions! Win-win!
Stay Ahead of Competition
Understanding your data helps you stay ahead of the competition. By using data analytics to identify trends and patterns in your industry, you can stay ahead of the competition and position your business for success.
Jenn’s Example: In analyzing her data, Jenn noticed a definite trend in the popularity of her specialty drinks. Specifically, to the 19-24 year old customer base. She decided to survey the customers ordering the specialty drinks and found 87% of them were students at the local college in town. With this information in hand, Jenn approached the college administrators and asked about the possibility of adding a satellite Jitters station inside their cafeteria. She offered a percentage of sales to the college and they were thrilled. Score another one for Jenn and the college kids!
Saves You Time and Money
Having great data analysis methods will save you loads of time and money. By automating data collection and analysis, you will quickly identify problem areas that need your attention or new income streams that can be developed.
Looking back, Jenn’s only regret is that period of time during her first year of business when she wasn’t reviewing her data. Like…at all! She now clearly understands the power of data analysis and how it can help business owners make informed decisions that keep their businesses growing and provide very healthy profits!
Overall, data analysis is a powerful tool for small businesses that want to make informed decisions and stay ahead of the competition.
Whether you’re just starting out or you’ve been in business for years, data analytics can help you achieve your goals and grow your business. So, if you haven’t already, start exploring your data with the world of data analytics today!
If you need help harnessing your data, join us for our upcoming free training at The Data Ranch! We will quickly make a data wrangler out of you and you’ll be able to understand what all that data you have is trying to tell you! Save your virtual bunk here!