02 Apr Is your business a Data Mine or a Data Desert?
Faster, faster, faster
Whilst living in London, I got into Road Cycling in a big way. Whether it was an early morning quick 40km around Regents Park, a 4 – 5 hour ride through the Surrey hills or trips to France to climb up or race on some of the famous mountains in the Pyrenees and the Alps, I loved it! I also loved how I could get accurate ride data to track and improve my performance. I’d come home from a ride, take my bike computer inside and download the data immediately. I instantly had access to my heart rate throughout the ride, my speeds, the cadence I was peddling at and the temperature and altitude to name just a few of the insights I was getting. The information was amazing, and I was able to use it to improve my overall performance in terms of higher average speeds, lower average heart rates and a faster, more consistent pedal cadence.
The data I was collecting was key. It allowed me monitor performance and pinpoint things I needed to work on to continually improve. I’m a firm believer that data used correctly leads to better decisions which ultimately leads to better performance.
You be the judge
As a business owner, how do you judge the performance of your business? There are several ways of judging performance based on what you’re trying to achieve. It’s fair to say that looking at one metric such as Revenue or Profit alone doesn’t really tell the full story. To understand how well the business is performing, several factors need to be looked at. Common ways for determining performance include things like:
- Gross Margin
- Working Capital Ratio
- Average Accounts Receivable Days
All of these things are fairly standard metrics to look at to understand how a business is doing. But they only answer the “what is” questions. They don’t even touch on the “why?”. And it’s those questions that are really going to give you a greater insight into your business. That’s where the gold is. They’ll tell you what you should turn the volume up and down on to drive your performance in the right direction. The data is there … you just need to mine it. So do you? Can you?
Of course, you’re sitting there vigorously nodding your head aren’t you? OK great. But let’s just test that a little more:
- How many quotes did you send out this month?
- How did the leads you sent the quotes to hear about your business?
- What are the top two reasons your quotes are not being accepted? And what percentage of your total declined quotes does that represent?
- What percentage of your employee’s time is productive and creating revenue for you? What percentage is unproductive and merely costing you money?
- What percentage of your revenue comes from your top 5 customers and what gross margins do you make from those customers compared to your remaining customers?
OK that’s enough questions. The point I am wanting to make is that the performance of your business is an iceberg. Things like income and profit – the usual ways to determine performance are merely the tip of that iceberg. They don’t tell you how you arrived at those figures, or what is working well and what isn’t. Nor do they tell you the opportunity cost of the actions you’ve taken and the decisions you’ve made throughout the month or year. If your business is well set up with excellent systems and processes, then you can mine the information you’ll be capturing to really understand what is going on.
Within your business you are likely to use different systems for things such as:
- Job Management
These systems provide opportunities to capture little tid bits of information about your clients, your staff, your assets, your stock and your jobs. The information on its own might seem irrelevant or unimportant, but when you use business intelligence tools to look at all the information you’ve collected, it can really tell a story. Hint: this is where the gold you’re trying to mine is.
Do you own a mine … or a desert?
Are you asking the right questions of your customers and recording the right information within your business? If you are, then we’ll be able to go mining! If not … we’ll need to find an Oasis before we die of lack of information because we’re in a desert. And growing things in a desert is nigh on impossible unless your business is a cactus farm.
Let’s run through a bit of an example using a scaffold company:
When a lead calls the business to ask for a quote, you can immediately:
- Learn how they heard about the business i.e. what channel did they go through that allowed them to hear about the company? Google? A business card? Billboard advertising? etc
- Log their geographic location
- Log what type of customer they are e.g. Commercial Construction, Builder, Residential, Painter etc
Next, you can focus on the quote itself and capture more information:
- Size of the job (scaffold is usually measured and quoted in a term known as Face Metres)
- The type of job e.g. exterior scaffold, edge protection or perhaps shrink wrap
- The distance from the scaffold yard to the site where the scaffold will be erected
- Understand the expected start date of the job as well as the length of time the job is likely to be up for
If we assume the quote has been won and the job is being undertaken, there’s more information to capture here too (actually if you lose it, you need to capture why you’ve lost too):
- The cost of labour working on the jobs
- Other direct costs that might be incurred such as engineering fees or shrink wrap
Get your pick out. We’re going mining
Now as I’ve already mentioned, looking at all this data in isolation, it may not seem interesting or relevant. However, a picture can quickly be built up by mining the data that has been captured and then linking it all together. There’s a wealth of information that could be captured based on the data listed above. Things such as:
- Number of Face Metres currently erected (so the business will know how many they have still in stock – helpful for forward planning of work)
- Income made per face metre of scaffold. Or even better … the profit made per face metre. Again, this could be broken down further to look at profit per face meter by customer or customer group. Now this company will really know which customers are making them the most money and which are costing them money!
- Forecasting the expected times a job will be ready to dismantle. Now they’re going to know whether they need to spend more money to buy more because of that large job starting in two months … or whether existing jobs will be down in time so they can reuse the scaffold immediately and save their bank balance from a big hit!
- What teams are working in line with expected build times and which are not. This will let you know who needs to get a pat on the back and who needs to have a rocket put underneath them.
The possibilities are endless! Whatever is important to you to help you really understand your business’ performance at a deeper level i.e. see all the iceberg, can be uncovered if your business is capturing all the information that is available to it. And it should be … because that’s where the nuggets of gold lie. If you’re not capturing it or you aren’t using tools that allow you to do so, there’s a bit of work that needs to be done first. It’s not daunting though and will turn your data desert into the data gold mine you seek.
You’re the General. Generals don’t belong in the trenches
So what’s holding you back? You’re the General right? The buck stops with you and it’s your job to grow the business. To be that General you must climb out of the trenches and go back to HQ. From there you can see the entire battle and put plans in place to win the war. That’s what the data in your gold mine does. It provides you with the overview of the entire battle that you definitely need to get ahead. Time to get on your white stallion and lead!
Want help getting on that stallion and seeing everything? 5th Green has successfully mined the data for businesses that want to get those deeper insights that you are also seeking. We’ve also implemented the tools, systems and workflow that have helped turn your desert into the gold mine you need. Get in touch and let’s have a chat about improving your performance and growing your business.