The Perfect amount of Data

Your business generates a lot of data.  Some of it reaches you, some of it doesn’t. Some of it teaches you, some is garbage.  Data is the new oil, says the Economist.  Forbes and the World Economic Forum disagree.  Regardless of whom you believe, data serves an important purpose.  And collecting and reporting data is invaluable for any business.  But all data is not equal.  Some of it is important for you to make decisions which impact your business’ future.  A lot of it is trivial and distracts you from the real stuff.

So which data should a business leader like you focus on?  This article distinguishes between essential and other data.  Note that data here refers to that generated within the organization as well as customer data.

The Essentials

The Essentials are data you should necessarily be looking at.  The bright future of your business is directly proportional to the attention you give to this data. Look at this data at least every week

Sales and Sales Pipelines

While its obvious that you need to look at your sales data, formalizing it through a routine helps.  Other than past week sales, pay close attention to your pipeline.  And understand what needs to be done to move leads to sales closure.  How do you do it?  There are plenty of inexpensive CRM tools to track performance.  Also, don’t underestimate the importance of a structured weekly meeting with your sales team.

Cashflows

Paying your suppliers and employees on time is important.  As is receiving your payments on time.  Spend some time every week understanding your business’ cash situation.  And take actions to remedy it.  Small weekly actions can prevent large fires in the future.

Customer issues

You obviously can’t deal with every customer issue.  But have a system in place which reports high-level data on customer issues.  Customer satisfaction can be a great predictor of business health in the future.  Don’t ignore it.

3-5 key efficiency metrics

Choose 3-5 Key Performance Indicators (KPIs) that give you a good picture of how your business is doing or your progress on a new project.  The metrics will change depending on your industry and your strategy.  Example KPIs could include target achievement, inventory turnover,and capacity utilization.  Choose your KPIs well and keep checking whether they continue to be good indicators of your business’ health.

What other data should you look at?

Look at the performance of your department heads.  Have a monthly individual performance linked meeting with the department heads.  And don’t forget to keep ‘walking-the-floor’.  That will give you some of your most insightful data.  Track statutory payments, regulatory filings and anything which could impact business continuity monthly.

The Time-wasters

You shouldn’t be looking at data on anything related to administration and operational matters.  That includes not getting data related to attendance, employee punctuality, how much coffee your employees drank or the movement of the company vehicle.  In other words, track outcomes, not inputs.  That said, set standards and have someone to track the data and report deviations.

On operational data, other than the efficiency metrics, don’t look at anything. Unless it’s to analyse the deterioration in an efficiency metric.

What if there’s bad or no data?

Then put a system in place to start collecting data!  Good, insightful data is invaluable to your business.  You don’t need a fancy software package.  You can even start with a simple weekly meeting with your department heads.

 Closing thoughts

As a thumb rule, if data you receive doesn’t help you grow your business, stop it from coming to you.  Carefully choose which data you receive.  And make the best of it.

What’s your experience with managing data?  Any additions to the ‘Essential’ data list?  Comment below or write to/call me at sunildias@iv-advisors.com / 9322 737 127