Research shows that data-driven businesses are often much more successful – yet small businesses rarely harness the data they have. This is partly due to the common misconception that you have to be a big business to use ‘big data.’ The good news, however, is that technological developments are well under way in the small business sector to facilitate the use of data. It is therefore becoming much easier for you to use the gold mine of data around your business which already exists through interactions with your customers online and offline. Identifying the data-driven insights you can obtain on your business will give you a clear idea of the benefits of investing in the emerging technologies to harness that data.
Closing the gap between big and small
The gap between big and small businesses is closing in terms of being able to use data-driven insights. It is now possible for you to access data on your business which will give you a better understanding of its performance and the behaviours and preferences of your customers. Gaining insight from these data points has the potential to help improve customer satisfaction through more personalised and targeted services. This will in turn lead to better customer retention, increased profits and growth for your business.
The technological breakthroughs making the use of data possible for businesses of all sizes fall into the following three areas:
1) Access to data: Cloud-based platforms are beginning to bring together data from individual small business’ customers, providing any one small business with more data than it could collect itself.
2) Man-power: Artificial intelligence will soon be able to provide cheap, reliable, digital intelligence to run behind all aspects of a business, cutting out the need for personnel to analyse data.
3) Acting on data: Automated solutions are developing to enable small business owners to use their data- software in the first place because current solutions are too complicated.
Before investing in the technological developments facilitating the use of data, the first thing you need to do is familiarise yourself with the data-driven insights which will benefit your business. The good news is that you already have access to most of the following necessary data points:
Accessing customer data
Think about it in terms of what you already know. Do you know enough about your customers to meet their demands and keep them faithful to your business? If you are a small retailer, do you know who your regulars are? Are you making sure you have the products they need in stock at the times they normally buy them? Do you take the opportunity to engage with them during key times of the year, such as in the run-up to the summer season?
You can already access data on how your customer base likes to pay, their favourite products and how much they usually buy and when, so make sure you use it to benefit your business. For example, by analysing payment data you can see which payment methods customers prefer and upgrade your card payments method accordingly.
You should also think about the data you have from past communication with customers. Do you already hold their email addresses from past requests they have made? You can use their contact information to get in touch with them about future offers.
Getting your hands on more customer data
There are also ways to quickly gain additional data. Why not try using promotions to gather customer information quickly when they are in your store? Asking questions such as what additional product or service they would like you to provide, will help you to build an understanding of your customers’ demographics – and this will help you plan the kind of products or services you should focus on selling.
Relationship building is crucial for a small business. The more data you can gather on customers the more you can tailor your services to them and keep them happy. Why not try getting them to like your Facebook page or follow you on Twitter so that you can update them on deals or new services in real-time and build a rapport with individuals.
Being smarter about the data you hold, finding ways to gather more data, and using the data you hold for actionable insights will have an immediate positive impact on your business.
Data driven decision making
Using data on your business’ performance is also an easy way to gain important insights. If you inform your business plan for the next year using data revealing the peaks and troughs from the previous years, you’ll avoid making the same mistakes again, and will be in a stronger position to take advantage of more profitable times. It is natural for any business to have highs and lows but as a small business with a smaller turnover, it is even more important to make sure the lows don’t stall your cash flow. In fact, recent Everline research showed that half (49%) of small business managers experience cash flow problems each year and a further 27% experience them at least once a quarter. Data-driven decision making will help protect your business against the unexpected.
Become smarter at spotting trends
Running a small business isn’t always a smooth ride and data can be used to spot patterns too. It can show you where your business makes the most money as well as identifying when it makes the least. Seasonal trends may be obvious to you but using data can help you prepare for the more random peaks and troughs. This could be recurrent trends in the weather; a plumber for example, will be busier when cold weather conditions affect homes but increasingly, cold weather spells are not when you’d expect. Data insight from the previous year could therefore be used to know when these busy times might start to have an effect on the business.
This kind of data can inform decisions such as when to hire temporary employees to help out or what additional stock to buy and when. On the flip side, it can tell you when to cut the hours your employees work or when to ask that some people are always working from home on any given day to save on overhead costs when the business is making less money.
Filling the gaps during the year when your business tends to struggle with the right finance can boost its cash flow and means you will have additional funds to grow your business. Our research shows that given £50,000, the majority (57%) of small business managers would use it to grow and develop their business by upgrading tools and equipment, employing more staff and investing in marketing.
Capitalising on the data sharing opportunity
The importance of data sharing has been highlighted by the recently passed Small Business, Enterprise and Employment bill. A major focus of the bill is that banks should be required to share SME data with alternative finance providers. This will help digital lenders to continue to make responsible lending decisions and be more supportive of small businesses seeking finance that have been rejected by their bank. One of the most valuable pieces of data lenders can use to gauge whether they are able to lend to an SME is bank statement data, which paints a picture of their financial status. Increased access to this sort of information could significantly improve lending decisions.
How small businesses will benefits from data sharing
If all small businesses lenders, traditional and otherwise, combine customer data, better informed decisions can be made across the industry which will in turn help increase the availability of finance for the right small businesses.
As a small business owner, it is important to remember that big data is a resource increasingly being used for different purposes by lenders and businesses of all sizes alike. Using data will give you a deep understanding of your business, your customers and your industry as a whole. Customer data can show you what to invest in and business performance data can show you when the best time is to do it and therefore the kind of finance you are likely to need.
You must take advantage of the data that is at your fingertips. New technological developments will make it easier for you to efficiently harness data driven insights on your business and using these to inform your business strategy is crucial if you are to remain competitive. Knowledge of your business’ peaks and troughs, what your customers want and what external forces are affecting it means you can amend your strategy accordingly. Data is a real source of power so use it to give your customers what they want before they even know they want it!