Analytics is a common word used in business. We all know what is analytics and what would be its impact on business. In real life scenario, we are making decisions in daily life. Have you ever thought how we are doing this? Decision making is an outcome of an analytical process. Suppose you want to buy a mobile phone, then what are the possible things comes to your mind? there are lots of options available in the market and you need to select one of the best that fits your need.So for that you have to analyze all the relevant facts . Similarly how Google can complete your search after typing 2-3 letters of a word.
This is the story of analytics. Now coming to our topic "Importance of analytics for small businesses". As a small business owner you must want to achieve success by maximizing profit. So what are the essential things you need to do? First of all identify and prioritize series of objectives.
Valuation analysis: Why it is necessary? Same business segment of yours have been funded recently, why not your company..? You can't continue your business with ideas only. If investors will fail to understand the feasibility of your project , then why would they spend their money on you. Use historical data about to extrapolate your Long term analysis. Analyze the level of development of competitors and threat to the competitive advantage. How much return you will get after 5 years. Identify your target for 1st year and then analyze whether your target will meet the amount funded. Get expenditure for the next 6 months and take 20% additional for wasting charges. Investment analysis: The most common reason of business failure is people spend lots of money on unnecessary stuffs. When you got funded by an investor, then what would be your current focus? You must be worry about how to utilize the fund effectively. Sometimes company spend lot of amount on advertisement and they don't have enough money for hiring and product development. You should focus on following:
Suppose you are going to hire 5 sales people then you should estimate the how much return you will get on this investment. Identify the which product or services gives you more profit and invest money on those to get more revenue. keep a proper account of return on investment for each sector and accordingly set proper budget for it. Now focus on only those investment which will help you to reach towards your goal. Click here to know more
3. Customer analysis: Customers are buying same products or services but they are not same. The more you know about your customers the more effective your selling and marketing will be. All profitable businesses know the value of these data.
Check how different and unique your customers are on the basis of their business size, type, geography, revenue . Now Your 70% focus should be on serving the most valuable customer segment, and rest on the less valuable. Your most valuable customer will give you more revenue but less valuable customer will Lead you towards innovation. Generate more profit and create new customer segments by creating innovative product.
Profitability Analysis: When most of the web designing and consulting firms receives payments from clients, they consider entire amount as their actual profit. Which is not true. Your expenses are not limited to employee salary and wages. There are other expenses which may occur in future.
As a profitable business, what you can do:
Set correct price above your cost (both fixed and variable cost) How much sales you should make How much profit you should have in your hand. How much money you have spent in each project, which project contributes more profit and how to get such more projects. Which product selling will keep on increasing without increasing number of sales people. Now connect the dots and do better analysis which will help you to reach your goals. Hope it helps. Make your small business profitable. https://in.linkedin.com/in/bhanupriya85