Data and Running a Small Business

Most small businesses don’t have very good reporting systems.  Other than observation, which works as long as what’s going on is observable, there are no operational reports that tell the owner what’s happening in the business.  It’s not surprising.  After all collecting and compiling data into a report takes time and, usually, from employees who are supposed to be doing other things.

But consider the benefits.

  • I know of a client who tracked the number of installations, the size of these installations, and the costs of these installations.  What did the client learn?
    • The overwhelming number of these installations were low revenue jobs with gross margins that were so skinny that the owner risked losing money on certain jobs
    • That the client was probably under-pricing these jobs
    • That the client techs either needed more training or replacement
    • That the client needed to deliberately target prospects with larger jobs
  • I know of a client that tracked how a job estimates compared to the actual costs of job delivery.  What did the client learn?
    • That one third of the jobs required more labor hours than estimated
    • That another third of jobs required fewer labor hours than estimated (tying up resources that could have been applied elsewhere
    • That the owner was assigning the wrong techs to jobs for which they did not have the technical experience (what tech is going to admit they can’t do the job;  they’ll plug along until they figure it out)
  • I know of a client that tracked customer usage of the company’s catering services.  Most were coming from existing consumer customers.  What did the client learn?
    • That most customers were coming from word of mouth, that is from current customers
    • That most of their customers and their referrals were from an aging demographic that did not reach a younger, more socially active demographic.
    • That the the business had virtually no corporate customers and that it’s marketing completely ignored this segment.
    • That the company needed use social media more actively to reach the younger consumer market.

In each case, the business did not track with sufficient detail what was going on and it was only through reporting over time did the lessons become clear.  None of this was observable.


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