In a recent conversation with a fellow consultant (Cathy Bamji of https://www.liferoading.com/), Cathy used a phrase that stuck with me: turning data into information.
It’s surprisingly easy for businesses to accumulate data of all sorts:
- customer contact data
- website analytics data
- financial data
- employee engagement data
- and so on.
What’s challenging is to put that data to use to make well-informed decisions.
Raw data can be overwhelming
The temptation for many business owners is to make decisions on gut feelings, instincts, and guesstimates. That may be easier than analyzing the data to turn it into meaningful information, but it also means you could be running your business on faulty assumptions. You don’t want to discover, too late, that things are not going as well as you thought.
So how can a busy business owner make better use of all that data, without hours of painful number-crunching? One possible solution is to look at how the data is currently presented.
Data may not be the problem
The problem is often not in the data itself, but in how it’s entered into the system, and the design of the reports that summarize and present it to the user. Small changes in format can make a big difference.
For example, I was reviewing some financials with a restaurant owner who was struggling to earn a reasonable profit. We got into a discussion of which of his operational areas (table service, deli counter, bakery), and which product lines within those areas (such as deli meat vs. fish vs. cheese), were most profitable.
Unfortunately, his accounting system was not tracking sales by operational area or product line. So when we looked at his profit and loss statement, we couldn’t tell how much of his gross profit came from which areas or product lines.
His cash register did track sales by those categories, so we asked the accountant to start entering costs and revenue by category, instead of at the summary level. This change will provide the owner with a simple financial report that will show gross profit for each product line, with totals by operational area, so he can monitor profitability much more effectively, with no extra number-crunching required.
Taking the time to figure out what kind of informational report will be useful to you, can guide you on figuring out what type of data you’ll need. This type of planning allows your system to do the work for you, with no number-crunching required on your part.
Tip: if you are working with an accountant, make sure to discuss your goals, and the information you need to make decisions, so that the data can be tracked and reported appropriately.
Data does require proper planning
Although this example uses financials, this same process can be used in any system that supports any area of operations. A little planning can help you make much better use of your:
- marketing data
- human resources data
- customer data
- and so forth.
The key is to think about the information you need to help you make better decisions. Once you’ve identified the questions you have, you can design your data capture and systems reports to give you those answers easily.
If you love the idea of doing this in your business, but aren’t sure where to start, contact Dunathan Consulting to get some ideas for turning your data into useful information.