Large global enterprises have long been exploiting the benefits of business analytics. For startups and SMEs, however, it’s a different story. Recent research from One Poll found that 56% of SMEs rarely or infrequently check their business’s data, while 3% have never looked at it at all.
The advantages of data analytics to enterprises of all sizes are well documented. It has already had a profound impact on organizations’ ability to better evidence their decision making, pinpoint areas to cut costs, and drive profits. For startups and SMEs, the fundamental advantage is that it enables growth, which is the prime directive for most. Business analytics can uncover hidden opportunities, identify trends and patterns, problem areas and successes, that may have been people may not be able to ascertain. In the quest for growth, it is also vital that startups take risks. Looking at the numbers can help greatly mitigate against these risks, and ensure they will provide some ROI and not bring down the company.
The foundation of a startup’s success is the idea. Every startup founder thinks they’ve got a good idea, but the sad truth is that the majority don’t, which is why so many fail. Realizing this is never easy though, and it is only through extensive market research that you can gauge whether the consumer demand is there to make the whole project worthwhile. Startups first need to understand their markets, products, and customers, and data analytics. In the early stages, it is vital to look at engagement metrics and feedback from users. This can be done using free tools like Google Analytics.
There are a number of other advantages to analytics. Startup launches no longer attract the same press attention they once did, with tech journalists now far more focused on stories around growth and success. It is important to check all such metrics and make them readily available to the media. It is also useful to show them to staff so they know they are making progress, in order to keep them motivated.
The main reason that startups and SMEs are not using data analytics tools more is the prohibitive costs. This is a fair doubt to have. The technology is cheap, and open source programs like Tableau can have as much impact as some of the more expensive software tools. However, they also require the time and training to make sense of them. The One Poll survey found that many SMEs failed to look at data because they were occupied by other tasks (33%). Smaller businesses need to appreciate the value that data provides, and allocate their time accordingly. Obviously, bringing an entire data analysis team in, as larger companies do, is not going to be feasible, but because the amount of required is so much smaller anyway, it’s normally not necessary anyway. Basic data courses can provide what the average startup needs, and then it’s simply a case of having a strategy in place to ensure it can be scaled up as the business grows.
Another thing holding back startups and SMEs is the belief that because they have smaller data sets they will be limited to just a few factors and it will not be worth it. This is untrue, and companies of all sizes are increasingly moving away from Big Data and towards smart and fast data. During last year’s Parliament and Internet conference, Kirstin Gillon, technical manager at the Institute of Chartered Accountants, pointed out that SMBs need to understand that data analysis is not just about volume, but variety.
In many ways, for smaller businesses, their size often actually means they carry an advantage over larger firms. In most cases, they face a significantly smaller amount of queries and can, therefore, focus on precise problems. The most powerful insights also mean little if a company does not have the agility to act on it in a timely fashion, and many big companies are simply too cumbersome in their operations and processes to effectively leverage data discoveries that should be acted on promptly.
However, it is worth also issuing a warning of caution. Unless the data is clean, properly digested, correlated, matched, and transformed across systems, the impact on a business can be devastating. So while startups and SMEs should not hesitate to embrace analytics, rushing in without doing any research is a dangerous game.