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Increasing Your Profit By Looking At Your Data

Written by: Steve Wilkinghoff

Article Overview: Every business accumulates massive amounts of data that can tell the business owner where the hidden profit and cash flow is in their business. But sadly, most business owners never take the time to think about or examine what the data is telling them.

Increasing Your Profit By Looking At Your Data

Everyday each business gathers an awful lot of data through the course of its operations. Every time a customer enters the business, buys something, pays for something, calls into the business, makes an enquiry, and on and on, their actions create data.

Over time this daily data turns into an absolute pile of data.

Unfortunately, by itself, all this data is absolutely useless!

Data by itself is like raw lumber. It needs to be worked into an end format that is usable.

Every business owner can take some fairly simple steps to convert all, or some, of their data into information. When done right, this information can help increase profits, improve operations, and increase employee morale, attraction, and retention.

How can this data be transformed into profitable information?

The first step is to determine what Key Performance Indicators (KPI’s) are important to your business. KPI’s are measures that tell you how well your business is meeting its plans. They are outward measures of activities that drive the profits of your business.

For example, how many customers does your business have? What is your growth rate in number of new customers? What is the attrition rate (customers lost) for your business? How often does your average customer buy from you? What is the average sale? What is your gross margin?

Once you’ve decided what the relevant KPI’s for your business are, then it’s time to start sifting through all the data your operation generates. The easiest way is to actually get your team together and spend some time brainstorming a list of all the different data sets your business gathers.

Once this has been done, it’s a relatively simple process to develop methods to transform the relevant data sets into KPI’s (both financial and non-financial) that are meaningful to your business goals.

By putting some effort and creativity into this activity you really can turn the data from your business into increased profits and cash.

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Article Tags: attrition rate, business goals, business owner, employee morale, enquiry, gross margin, key performance indicators, kpi, measures, nbsp, profits, rate customers, raw lumber, relevant data sets, rsquo, sifting through, simple steps



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