I’m often asked how investing in analytics will make a small business more profitable?
In my answer, I often quote a few data points from a study of 400 companies that the consulting firm Bain conducted. They found the companies with the most developed analytics capabilities commanded a larger market share. In addition, they were twice as likely to be in their sector’s top 25% for profitability, and five times more likely to make swifter decisions than competitors. Considering these statistics, businesses that are not exploiting the potential of big data analytics are certain to fall behind.
Sometimes I mention a study by the University of Texas that analyzed data sets from Fortune 1000 corporations and measured the impact data analytics had on profits. Some notable findings included:
- Companies could increase profit by more than $2 billion a year by making just 10% of available data usable.
- Return on equity increased by 16% by making data more accessible.
- When advanced reporting was deployed, return on investment increased by 0.7% — which is equal to $2.87 million in additional revenue.
- Most importantly, a comparably low investment in data analytics was required to produce these significant gains.
But just quoting a bunch of statistics is far from compelling.
That’s one of the challenges of “selling” big data solutions to small businesses. All the stats are not very relatable.
It takes time to get to know a business in a way that a tailored solution can be designed. Every business uses data differently, so no two solutions are the same.
That is why I walk entrepreneurs, small business owners and leaders through an assessment. With this we link hinderances in their analytics process to solutions that mitigate the hinderances. We can also look for technologies to optimize the storage, analysis and presentation of data. Only then can we set targets to achieve the benefits mentioned in the Bain and UT studies.
And for me that is both satisfying as business coach and fun as a data nerd.
Dan Meyer heads Sonic Analytics, an analytics advocacy with offices in Manila, the San Francisco Bay Area and as of February 2019, Ocala, FL. With over 20 years in Big Data, Dan is one of the most sought-after public speakers in Asia and has recently begun offering public training seminars in the United States. Dan has also recently joined the Powerteam International family as a small business analytics resource speaker.
Sonic Analytics(www.sonicanalytics.com) brings big data analytics solutions like business intelligence, business dashboards and data storytelling to small and medium sized organizations looking to enhance their data-driven decision-making capabilities. We also advocate the use of analytics for civic responsibility through training, consulting and education.
As citizens of this great democracy, we need to look at the data (analytics), plan a course of action (strategy) and share our data-driven viewpoints (presentation). This approach to a data savvy work force starts in school. So, we started an internship program to empower our youth to use Analytics, plan Strategy and Present their insights… ASP!
When not training current and future analysts, you can find Dan championing the use of analytics to empower data-driven citizenship by volunteering his expertise with schools and non-profits dedicated to evidence-based social progress like Saint Leo University’s Women in Data + Science Program and the Data + Women of Tampa Meet Up Group.