Many small businesses, even when they are an established company doing well, can encounter problems and run into a wall, blocking progress. Profits can level off and growth or sales can start to level out. This creates stagnation which can be a difficult challenge to overcome, especially to those who are risk averse. One way companies might overcome these issues is by analyzing existing data in the organization and looking for patterns.
In order to move your business forward and grow, you should analyze and try to interpret the data in your organization. This includes everything from previous financial statements, year-on-year sales figures and numbers, and even KPIs or estimated Vs actual figures. By looking into this data, you will eventually begin to find patterns which can be useful in not only helping you figure out the current state of your company, but in identifying where it is going.
Why should you analyze data for patterns?Most experts agree that there are four reasons businesses should be analyzing their data:
- You can better evaluate past performance.
- You can assess current status.
- You can more accurately predict future potential.
- You can make better decisions that will maximize profits and resources.
What types of patterns should you look for?Many small to medium businesses generate a wide variety of data, and it can be a challenge to narrow down what data types and patterns to look for. To start with, many businesses focus on three main patterns:
- Industry comparisons - By looking at the financial information from other companies in your industry, you can detect overall industry performance and identify any anomalies. For example, if some companies have increased sales and profits, while others are static or decreasing, the more successful businesses may be doing something that you can also adopt in order to improve your sales.
- Actual vs planned performance - By looking at your actual and planned sales you can see how the company is doing e.g., were sales lower than expected? If yes, you can begin to look into why. When compared year-over-year you should be able to see patterns emerging that help you resolve issues or take advantage of new opportunities.
- Trend analysis - This is comparing current and past performance with the aim of finding out where or how your business has changed. Some examples of patterns are how sales are trending, how profits are doing, and cash flow. From here, you can determine how differences have occurred and what corrections are needed.
How do you analyze data and identify patterns?Many businesses rely on spreadsheet software, such as Excel, to store, manipulate, and visualize data, to ultimately spot patterns. But this requires a fair amount of effort to establish and maintain, and as the spreadsheets grow, operations can slow down.
One option many businesses explore is utilizing Business Intelligence software, which allows businesses to easily track data and identify patterns, among other uses. There are a wide variety of programs, so if you are looking to begin tracking data and analyzing patterns, try contacting us today to see what solutions we have for you.