Data Analytics Make Informed Decisions EASY!
The better data one has, the better decisions a business leader can make. No matter what industry sector your business operates in, data tools are available to provide better data analysis and improved decision making. Many of these tools are easy to use. If one has basic spreadsheet skills, the data can “come alive” by focusing on any set of parameters.
Today automation tools often based on platforms like MS Excel or Access, take a basic set of data and, with some manipulation, yield findings that were previously difficult if not impossible to derive.
One tool that we encourage all business owners to use is this: add a column to your business expense sheet to identify the percentage of expenses when compared to gross sales. This is a simple percentage calculation; however, results can reveal a lot. If your expense spreadsheet has a column for expenses as a percentage of sales, you will see what expenses are costing as a percentage of sales. Let’s take a simple example:
If you have $100 in gross sales and find that rent is $25/month, the percentage of rent to gross sales is 25%. If utilities expenses are $40/month, then utilities expenses are 40% of gross sales. If labor expenses results in $35/month, then labor expenses to gross sales is 35%. Using this data, you can do further analysis to explore how each of these expenses is derived. Keep digging further and further. By doing so, you can quickly see which expenses to trim, but you must first know which expense categories are consuming the most resources.
Remember, too, data does not lie. Objectivity assures the absence of wishful thinking. While the findings may differ from what you believed originally was the case or formerly understood as reality, , the data is the data.
Surprisingly, though this is a very basic analysis tool, many companies fail to recognize the value of it and miss the opportunity for effective study of expenses, a key step to increasing overall corporate profitability.
And, of course, the bottom line is that every expense you reduce translates to profit and money in your pocket.