Business Intelligence (BI) is a relatively large discipline that covers the management and usage of data to tell stories about what’s happening in your business. Larger corporations spend significant resources on BI teams to do all kinds of data management and reporting. Many smaller organizations don’t think about it at all. For the small business or entrepreneur, knowing how to best leverage business intelligence without overdoing it can be a challenge.
Defining Business Intelligence
From a high level, Business Intelligence can be thought of in three steps; gather data, store/manage the data, and use the data to learn about the business.
As a small business owner or entrepreneur, you won’t likely have the resources for a dedicated BI team, but by putting a little bit of thought and energy into your business data, you can get real value that will help you manage your business more intelligently.
Many applications that you use will have some data gathering and reporting capabilities. For example, if you run Facebook ads (or ads on any other platform) you’ll be able to see some basic metrics about your ad performance.
Systems Thinking and Business Intelligence
From a systems thinking perspective, remember that a common attribute about any system is that it has metrics that can be captured to help you understand the performance of the system. In the case of running ads, you’re able to see views/impressions, clicks, engagement, etc. all which show you data about your business. Additionally, you can tie that data to how much you’re spending on ads and how many sales come from particular campaigns.
Being able to capture, manage, and utilize this data is achievable for any business, no matter the size.
Anytime you build a new system or document an existing system, one of the steps you should take is to define metrics associated with the system. Metrics are the data that you can measure and capture that will help you understand how well a system is working. Every system should have at least one metric associated with it that you are able to capture and review.
Like anything systems related, what you do doesn’t have to be overly fancy or complicated. It will be easier to use and manage if you keep it simple. Building something that is overly fancy will lead to frustration
Using Data to Understand Your Systems
Remember the key system attributes? Inputs, outputs, products, and outcomes can all be measured, creating data that will help you understand how the system is performing.
For example, a restaurant has a system for greeting and seating guests that come into the restaurant.
Inputs include menus, silverware, and the guests to name a few. Outputs include seated guests that are ready to order. A desired outcome might be a seated guest that is aware of who their server is and what the daily specials are.
When time is measured and added to the mix, you now have a rich set of data that can tell you how well things are working in your greeting system. Business intelligence would help you answer questions like –
How long do guests have to wait before being seated?
Does the duration of wait have any impact on the amount of a guest’s bill/order?
How many sets of silverware does the restaurant need clean in a particular hour?
How many menus are needed?
How many servers are needed for a particular hour?
Without the data, the answers to these questions would be complete guesses which could significantly impact the performance of the business if the guesses weren’t spot on.
Digital Businesses Too!
The importance of data and systems is just as significant to digital businesses. Understanding ad performance, problems Customers face in using your services, your Customer buying patterns, and much more are all dependent on your systems having some level of BI tools and capabilities.
If you’re a coach that sells courses, a good course delivery system is going to let you see how many Customers bought courses, how many get opened, how many get completed, and more. You’ll be able to see with data if Customers are all dropping off at the same point, indicating a potential problem with a course or the delivery technology. You’ll be able to see quiz results across all your students which will give you a better understanding of the effectiveness of your training.
Here are a few tips to think about when thinking about how you will use data and business intelligence to improve your systems.
Centralize Data Where Possible
If you can centralize data in one place, it will make it easier to consume the data (you have to go to 3 places instead of 10) and it will allow you to do more with the data you have.
If you have a system for running ads, a system for capturing leads, a system for managing sales, and a system for delivering products, you’ll have to go four different places and try and piece data together from these different systems to try and tell the story of what’s happening in your business.
Alternatively, you could use a CRM application to consolidate all of this data in one place. Leads can be captured into the CRM system. When a purchase is made, the transaction data can be merged into the Customer’s CRM record. You could then have your product delivery system update the CRM record again when the product is delivered or accessed.
By having this data in one spot, you only have to go to your CRM to see all of this data. You can also tie the data together across systems in ways that are unachievable if you’re looking at each system’s data separately. With the consolidated view, I can tie ad campaigns to specific Customers and see which products they purchase. I can see how long it took from the time the lead was generated until the time a sale was made. I can see how campaigns over time impact multiple purchases over the life of a Customer.
Don’t Rely on Manual Updating
While I’m a big fan of starting things manually, when it comes to data collection and reporting, you want to automate this relatively quickly to 100% automatic. I have seen time and time again, in my own business as well as in many others, that the manual updating of reports will almost always break down over time.
The good thing about data is that the collection and reporting pieces of BI are very repetitive, making them easier to automate than other processes in your business.
Check your ROI
The last thing you want to do is spend a ton of money and time building out loads of reports that you don’t actually use or don’t drive value to the understanding of the important parts of your business.
This is where the 80/20 rule can really come into play – you’ll get 80% of the benefits with 20% of the effort and this is definitely an area where good enough is good enough.
What to do next?
If you haven’t already done so, identify the 4-12 critical systems in your business. Each one of these should have at least one metric that helps you understand the health of the system.
After you’ve identified the metrics for each system, identify how you’re going to capture, consolidate, and review the data.
Start using the data in your business to get more intelligent about the decisions that you’re making.
Read our follow-up post on having a good data strategy in place before putting too much time into BI tools.
Reach out with any questions!
Business Intelligence for EntrepreneursPublished 6th June 2021
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