Business Types That Benefit From Analytics

Business Types That Benefit From Analytics

Data and analytics are not strictly the domain of Fortune 500 companies and multinational media brands. If you’re serving a million customers, a thousand, a hundred, or just one, analytics may well have something to offer you. If you were investing in stocks, you would pay attention to industry numbers whether you were investing ten dollars or ten thousand dollars on your first purchase. The same goes for analytics.

analytics and data

It’s not about size or scale, it’s about accuracy. Even if you have no interest in ever expanding beyond a small business model, analytics can help you to do your work more effectively and more efficiently.

The Roadmap of Analytics

Some businesses rely on data and analytics more than others, but no matter what industry you’re in, no matter the size of your business, you can get some use out of data by relying on it as you might a road map. Consider a brand like Netflix. They frequently greenlight new content based on what their users are already watching. They see that people love crime shows and they love director David Fincher, so it doesn’t take a genius to hire David Fincher to do a crime show like Mindhunter. A large restaurant chain may be able to look at the data to see that, for instance, spicy food tends to sell better in the Summer, so they roll out a limited time offer for a jalapeno burger or chili fries.

On a smaller scale, a food truck may look at the numbers and find that they only sold two coffees last month, so they sell off their coffee-making equipment, because running a whole cafe inside the tiny truck is more expensive than the five dollars they’re earning each month by offering coffee. Data can be applied in large or small ways, and the way that it’s collected can be local, demographic-wide or global.

When Does Data Come Into Play?

The sooner you start looking into analytics, the better.

Before you have start up capital or a business plan or you’ve even which industry you’d like to explore, the more you know going in, the more informed your decisions will be along your path as an entrepreneur. Of course, it’s never too late to get into analytics, either. Basically it comes down to this: If you’re not looking at the numbers already, then it’s time to get started. It’s never too late to get moving in the right direction.

At the start of your venture, big data will tell you whether or not there’s an opening in the market, it will tell you which needs are not being met, the average age of your prospective buyer and how to reach your ideal customer. As you progress, analytics can help you to stay informed on what’s working and what isn’t, from the small scale, such as what items you might want to keep in stock in your store, to bigger concerns, like where to open your next location and how to spend your advertising budget.

Analytics: Why Talent Matters

Analytics, on their own, are a bit like a big stack of law books. If you’re in trouble with the law, you can go ahead and look through all of that data, but chances are slim that you’ll actually be able to find anything useful. It’s in there somewhere, but good luck finding it, and good luck identifying it when you see it. There are a lot of numbers you can track in investigating your demographics, local economy and industry metrics, but most of them aren’t going to do you much good, and the ones that are useful, it might not be obvious why they’re useful.

So in legal matters, you hire a lawyer, and when it comes to analytics, you’re looking for people who know how to organize and interpret the data relevant to your business. For a big business this can mean a whole team of in-house analysts. For a small business it can mean hiring a freelancer to help you out on an annual or quarterly basis. In any event, the numbers alone aren’t as handy as the numbers and someone who knows how to read them.

From there, it’s up to you how to proceed. Your analyst might see an opening in the restaurant industry in your local area, maybe you could make more money by expanding your menu to include Mexican cuisine, for instance. But maybe that’s not really in-character with your brand, or you would rather serve a great hamburger than a mediocre burrito. In any event, the same data is available to just about everyone. You don’t need a great analyst and you don’t need to be a smart entrepreneur to look at the numbers, but you do need some talent and insight to take advantage of the numbers.

That is to say that if data is a road map, well, that doesn’t mean you’re a good driver or that your navigator knows how to read the map in the first place. You still need to bring your talent, your abilities and your ideas to work with you. The data is there just to make sure that you’re not working blind.

Of course, the best solution, if you’re running a small business, is if you’re able to manage your analytics data yourself. If you’re able to take a look at the numbers that you need and instantly formulate a new marketing plan or a new product launch, then you’re cutting out a lot of time from the start-to-ship pipeline. The right software can be a tremendous help in this regard. The more you know about analytics, the better, but you don’t need to have a doctorate in business analysis just to be able to take some basic data points and build an effective business plan around them.

The most talented people in analytics tend to be multi-talented in any event. Someone who focuses on marketing, as well as data analysis, will go a lot farther than someone with a more broad, general sort of understanding of analytics. That is to say that if you’re focused on a specific discipline of business or a specific industry, then you will immediately know which points of data are worth looking at, and what certain trends mean.

A downturn in, say, the sale of jewelry may be tied to the prices of precious metals, for instance. This is less of a concern in an industry where there are no raw materials to track. Someone who is analyzing subscriptions to a digital service doesn’t need to concern themselves with the price of gold on the open market, so they bring a different set of abilities to the table, and they are more suited to address that specific field.

Here’s what it comes down: If you’re an entrepreneur, then you know that the more you read, the better you will be at your job. It’s a bit like being Sherlock Holmes, being knowledgeable enough to see what others do not. Business is like a mystery that needs solving, and the more you know, the stronger you will be at that task. Learning analytics means learning how to see a whole world of information that others may be completely blind to.

The Short Answer…

If you want a short answer to the header, if you just want to know who can benefit the most from analytics, the answer is: everyone.

Whether you’re running a multi-location coffee shop brand or just selling some stuff on Etsy or eBay now and then, analytics simply allow you to waste less effort. That’s all it really is. The numbers let you know where the dead ends are, who’s buying what, and where you’re wasting money vs. where you can treat those expenses as loss leaders or long-term investments.

Analytics is just a way to track numbers. That’s all it really is. With the right people looking at your data for you, with the right insights and innovations on your part, analytics can be incredibly useful no matter what business you’re in, no matter your industry, and no matter the size of your business. Whether you make one sale a year or a million, whether you work with a single B2B client or you serve thousands of customers a month, analytics addresses the efficiency of how you do your work.

web analytics

How Do You Get Started?

The most obvious place to get started: With the software and the data. Managing your own analytics can be intimidating at first, but with practice and experience you will eventually get the hang of it. If you want to get up to speed quickly, you can check out courses at local community colleges, or just browse Youtube and keep up with business blogs to get an idea of how to put the numbers to work for you. It may seem like an impossible task, but even if you’ve never been the most tech-inclined person, it is easy to grasp once you get the hang of it.

As we mentioned above, the numbers alone are not that useful without the right education, the right perspective. Learning how to put the data to use takes some experience and some reading. Here are some books that you may want to consider in order to turn big data into big results:

  • Moneyball: The Art Of Winning An Unfair Game. Maybe you’ve seen the movie. The book goes much more deeply into the actual math used in the process explored in the film. If you’re a small business owner, this one is a must. A good analysis of how to use big data to your advantage, as well as a call-to-arms for those of us trying to get big results on a small budget.
  • The Long Tail: Why The Future Of Business Is Selling Less Of War. Not every new product launch or business venture is going to be an instant victory. The Long Tail, and the companion book, The Dip, by Seth Godin, will help you to tell a long-run investment from a money-sink.
  • Predictive Analytics: The Power To Predict Who Will Click, Buy, Lie Or Die. Nobody has a crystal ball, but Predictive Analytics is pretty close.

From here, our advice is to take it slow. You don’t need to pivot your whole business around analytics just yet, but if you use data to inform your business in minor ways at first while you build experience, you will eventually get to the point where it becomes second nature, where you are in touch with your industry better than any of your nearest competitors.

It takes patience, experience and a bit of daring. The data won’t completely remove the risk of doing business, but it will give you some guidance along the way so that you can take calculated, meaningful risks.

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