Small Business Advice: The Importance of Making Data-Driven Decisions
Are you looking for small business advice? One of the most important pieces of small business advice we can offer is to use data to make decisions. When your company was very small, you could make decisions based on hunches. Now that your company has grown, every decision has higher stakes. Making the wrong decision could cost your company a lot of money.
Small business owners need access to real-time, accurate data. With a cloud-based ERP solution, you’ll always have access to the current data you need. Here are some of the data-driven decisions you can make to grow your business.
Manage Your Inventory Effectively
When you first started your business, you may have had a small inventory in one location. You could see at a glance how much product you had. Now that you’ve grown, and have multiple stores or warehouses, keeping track of your inventory is harder.
With real-time inventory data, you’ll always know how much of each product is stored in each location. This means you can transfer products from one location to another instead of ordering more. This helps you avoid wasting your money on products you don’t need.
You’ll also have access to analytics about your inventory. For example, you can use your ERP system to find out your turnover rate. If you learn your turnover rate is low, you’ll know you have excess inventory. Then, you can either have a sale to move more product, or you can stop buying so much product going forward.
Identify Your Best Customers
Do you know who your best customers are? It’s easy to lose touch with your customer base as your business becomes more successful. There are just too many customers to keep track of without analytics.
With real-time customer data, you’ll be able to see at a glance who your best customers are. You’ll know who’s been a customer for the longest time, as well as who’s spending the most money. This information lets you know who to spend extra time on. For example, you could decide to send handwritten thank-you notes to your VIPs. Without this extra attention, they could feel unappreciated and take their business somewhere else.
Help Spot Inefficient Spending Habits
Overspending can sink a small business. To remain successful, you need to carefully control your spending. Small or inefficient spending adds up quickly, and before you know it, you could find you’re in a cash crunch.
You need real-time expense data to stay in control. This is harder when you have many employees and contractors submitting expenses. With your ERP system, you can see who’s spending your money, and what they’re spending it on. You can see a breakdown of spending based on categories, locations, projects, employees, and more.
For example, you could discover that your employees are spending a lot of money on taxi services or rental cars. To save money, you could encourage employees to share taxis with each other or rent less expensive cars.
Through data, you could even discover that employees are using their work credit cards for personal expenses. By following this small business advice, you can set clear boundaries about what can be charged to the cards and cut your expenses.
Discover Common Problem Areas
Every small business has to resolve customer issues. No matter how well you run your company, you can’t keep everyone happy all the time. If you’re not using data, you may not know what issues your customers are encountering. You’ll be resolving problems one customer at a time, rather than trying to stop patterns.
For example, you could discover that it’s taking a long time for your CSR team to answer customers’ calls. By hiring more CSR employees, or helping your current employees become more productive, you can nip this problem in the bud. That’s much more efficient than continually apologizing to customers whose calls weren’t answered.