Business Building

This topic is the King - for holding people (whether business owners or managers) accountable and for finding out if they are being intentional, or whether they are winging it and then blaming “circumstances”.  It is also good for finding out if you are (frankly) kidding yourself about being on track for achieving the results you have aimed for this year.

The topic is “how you use information in your business”.  First questions first though ….do you even have the relevant data in your business?  Many businesses operate in perpetual chaos, lurching from one month to the next, and as long as the cash balances in the bank seem to be roughly within expected ranges then they are happy.

Others capture and record meaningful data in some areas of their business, but have not made the time or seen the reason to make it a priority in other areas of their business.

Next are those businesses that have great financial records and clean Profit and Loss statements and Balance Sheets, and they think that they are at the head of the class.  But they still only have half the picture.  They have not yet made meaningful use of the data and had it become useful business information.  You know that you have “useful” business information when you can look at the information about an area of your business and clearly identify an area for action, execute on what needs to be done, and have a result that benefits the business.

The most critical area neglected by most businesses is their sales data:

Customers – How many do you have?

What types of customer are they? (you choose the categories)

What are the average revenues per customer per year that your business has achieved in the last few years?

What are the products or services that are most purchased?

How seasonal is your business?

How do the spending habits of different accounts vary over time – are there any annual patterns?

Is there any correlation between the buying of one product/service by customers and the buying of another product/service?

Are these products/services bought together or in a particular sequence?

How about your margins?  Not just annually, but by product/service line?  By customer type?  By quarter?

How about the ratios of your other expenses?  What channels of marketing do you get a return on?  How do you know? (or are you just guessing?)  What is the return and how are you measuring it?

Many small businesses (a huge number) just claim that they are too busy making ends meet each month to put these numbers together.  Well, the sign of a professional business is in not accepting such excuses, but in acknowledging what needs to be done in order to put you in a position to have this data – where you can then use the information that you then pull out of it.  Then going ahead and doing what needs to be done.  Being too busy and/or overwhelmed and under resourced is not an excuse … it is a symptom of a disease deadly to business - keeping busy and blindly hoping that things change and luck just goes your way.

Well, going to the casino is a more enjoyable way to lose your money.  You will also impact less people, such as employees, customers and suppliers.

If you say that you are no good with numbers and systems then find a decent strategy consultant and a “small business intelligence” professional.  If you do not know one then post a comment and I will see if I can help connect you with one.