Business analytics and business reporting are your road map. You can afford to wing it on a road trip, sure. You can just see where the highway takes you, but the thing is you can get maybe fifteen, twenty, thirty miles on four dollars of gas depending on what kind of car it is that you’re driving.
Just winging it when you’re running a business, on the other hand… Running even a small business can cost thousands of dollars a day between payroll, rent and utilities, taxes, licensing fees, inventory, the costs add up quickly.
Now, the reason we start a business might not just be to turn a profit.
That is to say that if you start a coffee shop, what you’re really doing is opening up a spot where people can hang out with their friends, meet new people and have a cup of coffee or tea or hot chocolate or maybe an Italian soda.
But you have to turn a profit in order to provide that experience, because running a place like that costs money. Good business analytics and business reporting allow you to turn that profit in an efficient way and provide a better experience for your customers.
So yes, the road map is absolutely necessary.
You might be able to get by from month to month without ever taking a deep look at your weekly comings and goings, without ever taking the time to analyze industry trends and your competitors. But the better you’re doing, the better an experience you can afford to provide.
And if you want to guarantee longevity in your business, you need to be aware of what’s coming up around the next bend in the road.
The industry can change right out from under you, and good business analytics and reporting will help to ensure that you don’t get caught unprepared for the ebbs and flows, the shifts and changes in your marketplace.
The Difference Between Business Analytics And Reporting
Business analytics and business reporting are two phrases that are often used interchangeably. There is a lot of overlap between these two fields, but they’re two different things.
They have a starting point in common in that they are both oriented around taking hard data and turning it into something that can be put to use by a business to improve performance in one area or another.
One way they differ is not unlike the difference between research and a news story.
When you read the news story on a new study suggesting that, say, caffeine helps lab rats to grow hair, the research itself is going to be referenced, maybe with pie charts and basic findings, but it’s also going to be presented in a way that is easy for the layman to read.
The academic papers published in scientific communities will make even an intelligent person’s head spin. They’re full of terminology and arguments that read like an alien language to anyone not involved in similar studies.
A science reporter’s job is to take all of that data and figure out how to tell a story about it, something with a clear meaning, a beginning, a middle and an ending, and summarized in a handful of paragraphs so that even those pressed for time can grasp the main points in a few minutes’ time.
Put simply, there’s a lot more information in an analysis than there is in a report.
Just like research versus reporting in science news, reporting is not going to give you the whole picture. Reporting tells you “Coffee helps lab rats to regrow hair.” But it doesn’t go in-depth on why that is.
To put this in the simplest way possible:
- Business reporting is measurement. It tells you that your business is having a rough third quarter, or that you’re selling a lot of umbrellas lately.
- Business analytics is investigation. It tells you why you’re having a rough third quarter, and why you’re selling a lot of umbrellas lately.
Going back to the road trip analogy, your business report tells you how many miles you have left to get to your destination, how much gas is in the tank, whether or not you’re low on snacks. Your business analytics will tell you how long to the next gas station, the quickest route to your destination, and who keeps eating all the potato chips before you get any.
It’s a difference between information and insight. Reporting is “here’s where we found a leak” and analytics is “here’s how we can fix it, and what’s going to happen if we don’t.”
And sometimes, “what’s going to happen if we don’t” isn’t a big deal. A slow month might just be a slow month, it might not point to any major, persistent downturn.
If you always see a lousy first quarter before springing back with a strong second quarter, the business reporting might make the situation look dire, but the business analytics might find that it’s the same slow season you always experience, and there are no unique data points this year that suggest it’s going to be any different than it’s been in the past.
Not to say that that’s always the case, but you’ve had slow seasons before, and you’ve gotten through them, right?
Even the bad news isn’t always bad.
Reporting is often a starting point for analytics, delivering immediately available information, after which the analysis will explore in-depth and figure out, simply put, why that is the way it is, and what’s to be done about it, if anything.
The Importance Of Good Business Analytics And Reporting
As a CEO or a manager or a president, your job is largely oriented around decision making. If you understand the fine science aspect of business analytics, that’s great, but it’s not really the core of what your job is about. Just as a film director might not know as much about the workings of their camera as the director of photography does, or a ship’s navigator has a stronger grasp of map reading than its captain, the chief, the guy or girl running the show, surrounds themselves with expert analysts and advisors because their job is not to analyze and study, but to make the best possible decision based on what is being presented to them.
And even if you’re more than capable of analyzing the data yourself, that might not be the best way to spend your time as the chief operator if your bootstrapping days are behind you.
This is why investing in good business reporting and analytics is so important.
A business is primarily built from information.
Everything else about the business is interchangeable. The truth is that if your building gets demolished in an earthquake, you can collect the insurance and build another office space somewhere else. If your funds are drained, you might be one good day away from being back in the black.
The real foundation of a business is the information.
That information could be your client list, it could be the number of a promising web developer you had recommended to you, it could be the secret formula for your most popular soft drink or a Washington Times’ reporter’s favorite burger place if you want him to be in a good mood when he interviews you. A business is built out of information, and the boss’ job is to take that information and turn it into a decision.
No matter how good you are at making decisions, it doesn’t matter if the information is faulty. The best ship captain in the world can’t make up for a navigator who’s just pointing to the stars and making guesses.
A great CEO, manager, president or editor in chief can’t make up for bad business reporting and analytics, unless the first decision they’re making is to hire someone better to do the analytics and reporting.
In that a business is built on information, a business is only as good as the information it has access to, and how it’s being analyzed and presented.
Going back to what we said in the beginning, yes, you can skate by with weak reporting, weak analytics.
But not forever, and you’ll never be performing at your best.
Is that enough?
Running a business is nothing if not a journey. As with any journey, there will be times when you feel lost and don’t know what to do next, what step to take. And like any journey, you will eventually find your footing before getting to where you want to go.
Business reporting and analytics don’t do your job for you. You can figure out what the lay of the land looks like, you can figure out how to get to certain places, but it’s still going to be down to you to make the best decision possible with the information that you have available to you. And sometimes the information will be inherently incomplete.
It’s analytics, not fortune telling. And sometimes you’ll have to rely on a little bit of luck. But good reporting and good analytics take a lot of the guesswork out of it, so that you don’t have to rely on luck anymore than absolutely necessary.