Leveraging Data: Not Just for Tech Businesses

Here’s a staggering fact: An estimated 90% of startups fail. This often happens in their second through fifth years of operation when the companies have launched a product and are entering the execution phase. With multiple pressing operational issues and few skilled employees, startup founders and small business owners, in general, feel that investment in data strategy, data collection, and data analysis is a luxury that they simply cannot afford because they need to dedicate their energy on actions that will produce results now, rather than in a year.

But if you run a business without knowing where you’re headed, should you continue to work harder but be essentially blind to growth, or should you invest in data to point you in the right direction?

Small businesses have very scarce resources, which is precisely why they cannot afford to waste any of them. The only way to ensure they make the most out of what they have is to adopt data-driven decision-making.

At this point, you might wonder, “Can all small businesses benefit from data? Isn’t this framework mostly beneficial for digital startups rather than traditional firms?”

That is a misconception.

Data has transcended the IT industry and is vital to nearly all leading industries. For example, you can see data at work in banking/finance, media/advertising, healthcare, government, manufacturing, tech startups, and retail.

Predictive models and analyses are the future of how we will build our institutions, deploy solutions, and make major decisions. If your company needs to understand its customers and find ways to offer a better product, or if you are interested in running a more operationally efficient business, then you certainly need to give data strategic importance.

Consider this scenario. There are two businesses:  a traditional grocery store and a digital business – an online grocery shopping app. Presumably, traditional in-person grocery stores do not have as much data as the digital business, which puts them at a slight disadvantage.

However, due to technological advancements and data science being able to integrate into almost all business pipelines, the management of the traditional grocer has multiple options to utilize data and begin collecting insights.

Here’s what they can do:

• Collect information on footfall. This can ensure stores are in high-traffic areas or that aisles receive sufficient customers, probably by placing sensors that detect mobile phone signals.
• Monitor the volume of shoppers. Seeing how many people enter the stores in specific time frames can help vendors experiment with promotional messages and different product arrangements to attract more engagement.
• Stock items or offer discounts by purchase data. Seeing which items are purchased together or more frequently can help determine discounts to offer or when to shelve items bought together closer to each other.
• Compare store performances to make improvements. If a store has multiple branches, management can use data to understand if and why one location is doing much better than the rest and then apply these good practices in the other stores.
• Analyze sales receipts. Gathering sales data in spreadsheets or a BI tool can reveal the relationship between store discounts and volumes sold, thus giving an idea about price sensitivity.

Do you see how even brick-and-mortar businesses can benefit from data-driven decision-making?

Every business has numbers and patterns, whether they are a digital business or not. Think about your own business and what transactions occur there with people, sales, stocking, etc. You may be able to see patterns you can quantify into data that will help you make observations about trends related to your business and compare your data to similar businesses to help you make decisions.

Data is the new oil. The data science revolution across industries and society at large has just begun. According to McKinsey, by 2025, smart workflows and seamless interactions among humans and machines will likely be as standard as the corporate balance sheet. Most employees will use data to optimize nearly every aspect of their work. No magic wand will automatically make a business, like a startup, succeed. Still, data is a close second to helping businesses in every industry make the best choices and optimize their operations.

Written by: Mansi Aggarwal