With our Aegis leadership series in full effect, this week we recognize Malcolm Mackenzie, Aegis’ Financial Analyst and Assistant Manager of the Accounting and Outsourcing department. With this role, Malcolm analyzes the entire organization and departments to better understand our financial performance. He ensures that leaders have verified data to improve their decision-making capacity. Malcolm shares the importance of business and how small business owners can implement supportive data collecting systems.
Good Data is the Foundation of Good Decision Making
Data allows business owners to discover blind spots and improve decision making. Better decisions mean better performance. Collecting, analyzing and actioning data offers businesses a competitive advantage and using technology to drive these data collecting processes exponentially increases the potential of businesses in today’s economy.
Malcolm shared, ‘Data is becoming the new gold, the new oil’.
Here are five tips for small businesses owners:
- Invest in tools that manage your data more effectively. While several business owners rely on excel, it is not a database. Excel has its limitations and is a great short-term solution but not efficient for long term use. Your business will grow, and so to should your systems & processes. There are many monthly subscription accounting software platforms that have low cost, affordable packages.
- Be conscious of what you’re trying to achieve with your data. Knowing what you need to get out of it, will help inform what is needed. You can’t understand if you have higher revenue growth in one geographical area over another without knowing where your customers are.
- Collect, collect, collect. Though the data collected may not seem to have an apparent purpose right now, time will show its benefits to decision making. Can you afford to wait until you need to make a strategic decision to start collecting data? With the pace of change today, data can also inform new, innovative strategies for unprecedented events, like sustainability/growth within a pandemic.
- Embrace technology. So that you can improve efficiency and work remotely with tool such as Microsoft 365 and use of VPNs. With advancements in technology & AI, how long do you see data entry being a relevant skill within a business? Accountants will add more value by understanding and interpretation of financial statements, while a software does the preparation.
- Surround yourself with a dynamic team. Maybe numbers aren’t your thing, and you prefer to be on the road selling your products. Partnering with persons who can cover your weaknesses, and build upon your strengths will only lay foundations to success.
For business owners that continue to grapple with the question: how can I move my business forward from this economic slump? Malcolm offered his pragmatic advice.
Data can be used to set the standards of your business which is then compared with the actual performance. At this point, business owners are able to recognize the gaps in their business.
Here’s how business owners can strategize to bridge this gap:
- Accept the facts. Once verifying that the data is accurate, accept the story it is relating. Don’t try to hold onto past realities or ways of thinking, as the environment around is always changing and you don’t want to be left behind. There may be more facts than you’re aware of that need to be considered.
- Get down to the why. Business owners must reflect on why their data is showing this. What circumstances arose that created the outcomes we’re now seeing? For example, for a business that sells an item at a price point of $100 which recognized that sales volumes are down – Is it because their products are of low quality to ensure larger profit margins? Have we spent too much on packaging? Or have competitors come into the market that have attracted our customers? It falls to the business owners to understand the why and make appropriate decisions.
- Be realistic in your thoughts and expectations. When strategizing the way forward for business, it is important to be realistic. Hanging onto unrealistic expectations will undoubtedly impact the business and its employees. For example, let’s take a business that is tracking how their employees spend their time as a metric for performance incentives. We’ll look at an employee that currently spends 15% of their time with clients and the remaining 85% on work meetings, coaching subordinates, and other back-office tasks. For this employee, it may be unrealistic to set a goal that demands that 100% of their time is spent on clients within their current portfolio. The business owner in this case must lower their benchmark, adjust strategy and change the indicators used to hold employees accountable. With this, your employees will be working towards more practical goals of increased productivity.
- Prepare to make decisions. If the data is telling an unfavourable story, be prepared to cut your losses. As a small business, if a product isn’t making you money, you have to consider if it is sustainable or if you can accept a loss-leader for the benefit of the wider business. It may be in your best interest to halt this service or product which will free up time and resources that can have a better return in other areas. Sometimes, no money is better than bad money.
If you need help managing your accounts or analysing your data, get in touch with us at email@example.com