From Richard Branson and Elon Musk to Susan Wojcicki of YouTube, the world’s top business leaders and entrepreneurs all embody the idea of “nothing ventured, nothing gained.” Risk-taking is a crucial ingredient in business success, especially for small-business owners who often give up a “steady paycheck” to follow their dreams.
But how often are their decisions uncalculated? The reality is these decisions are frequently made using outdated information that is often based on what’s worked in the past. This isn’t a good foundation for risk and likely part of the reason why around 60 per cent of small businesses close their doors within three years according to the Australian Bureau of Statistics.
Large enterprises know that without the right data, success is unlikely. But many SMEs lag when it comes to data-driven decision making. A recent report by Deloitte found that while digitally-savvy SMEs are 50 per cent more likely to be growing revenue and eight times more likely to be creating jobs, the vast majority (87 per cent) don’t take full advantage of today’s digital tools.
Real-time data provides unique insights into formerly invisible parts of businesses, resulting in better informed and stronger outcomes. Experts have highlighted the importance of data for a long time. However, few have talked about what a data-driven approach might actually look like for small businesses. Here are three areas in which data can help you reduce risk and make better, more profitable business decisions.
1. Improving your financial planning
Many business owners underestimate the power of being able to access numbers quickly and accurately. As the business grows, the once-convenient tools from your early days may well start to hinder your potential.
Previously, it was mainly large businesses that relied on enterprise resource planning (ERP) solutions to manage their operations. However, these solutions are increasingly being adopted by smaller businesses. Integrating processes, such as having sales orders flow straight into the financial system, saves valuable time and lowers the cost of doing business, also providing the data and analysis needed to make informed business decisions.
2. Streamlining order production, fulfilment and supply chains
Supply and demand is a delicate process and it can be difficult to find the right combination of cost control, lead times, and service quality. Keeping track of inventory and shipping costs is critical for success.
By integrating financial, customer and inventory data, future imbalances in demand and supply can be better identified and even predicted with adjustments made to benefit the business. With a real-time overview, delivery plans can be automated to support important functions, such as customer issue tracking and returns or repairs. Smart ERP technology allows small businesses to think big and make decisions regardless of where products are made or delivered to.
3. Bringing structure to HR, training and people management
Small businesses often take an ad-hoc approach to recruiting, training and talent development; many use spreadsheets and have no HR system at all. Today’s ERP systems enable simple, cost-effective ways to manage HR functions within the context of the wider business that are often otherwise difficult to keep track of. These systems enable SMEs to track employee history and compensation, compliance requirements, performance management and more. With the right tools in place, you can ensure your team is on track.
Small-business owners have a big task to handle a multitude of responsibilities daily. By using data to connect key areas like finance, production and sales you can achieve better results, focus on what you do best and react to new market opportunities swiftly and confidently.
Lee Thompson, Group Vice President & GM, Asia Pacific and Japan, Oracle NetSuite