I attended a business conference earlier this month, where the topic of big data came up. I was surprised to see how many people are still sceptical about the value of big data in the world of business.
You probably know that big data is being used by business owners all over the world. The market for big data is growing faster than anybody ever predicted. According to PC Magazine, the market for big data was worth $189 billion last year.
Big data is something that business owners can’t ignore in this economy, since the deck is stacked against them. If you are running your own small business you will know that it can be very tricky ensuring that every element of the business is taking care of and running as efficiently as it should be. Big data can help you operate more efficiently.
One of the most important elements of any small business is the financial side of things. If you don’t get that right, it can severely affect your bottom line as well as your company’s future. This is one of the biggest ways that big data can help. Philip Piletic of Big Data Made Simple talked about the need for big data in small business finance.
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Here are 4 ways to ensure your small business profits are being maximized.
Analyse and reduce spending
While spending less doesn’t always equate to making more, it will be the case in some areas of your business. If you don’t properly monitor spending, it can eat into your profits. You can use big data to monitor your cash flow better.
Consider a scenario where there are any areas of your office space where you could reduce your expenditures. Are you, for example, spending too much on heating and lighting? Whether it means switching to LED bulbs or having movement sensor lighting installed, it could save you money and help the planet at the same time. Do you know what you and your staff are spending on stationery each month? Track the last few month’s orders and do a stock take. It is very easy to overspend in areas you never even considered. Saving money equates to additional profits so be aware of your outgoings and make changes where possible.
Inside Big Data says that this is one of the biggest benefits of big data. Companies are using machine learning to better monitor spending.
Are you correctly invoicing your clients?
This is one area where many companies fall short. Carrying out work on behalf of a client but failing to accurately keep track of the time spent can have a huge impact on your margins. There are various ways to monitor your spending and ensure it’s being done correctly. Big data is making this a lot easier.
One of the simplest and most effective is to use a time tracking software package. Time tracking in Quickbooks, which allows the service provider to allocate the time taken on each project. This software relies heavily on big data, as Intuit mentions on their website. The user simply enters the hours they have spent on a job and when the billing period arrives or the project is completed, you can invoice your clients accurately. It uses big data to provide real-time information at any time and speeds up accounting processes. This system is also an extremely effective tool if you use fixed fee quotations. It gives you the ability to track whether or not your quotations and your real-time hours spent coincide. If they do not, this could substantiality eat into your profits. The data available to analyse may make a huge impact on how you bill your clients in the future.
Set company budgets and targets
Another way to maximize profitability with big data is to set a clear budget and targets for the year. Analyse data from the previous year and establish what could have been improved. Consider what you feel worked well and then forecast the coming year’s income and expected profits. Creating an annual budget provides you with a workable target and allows month on month analysis as the year progresses. Where possible you should try to exceed and better what you did the previous year but make sure your budget is realistic.
Have a happy and motivated workforce
If you have a motivated and happy team then you are more likely to break barriers in terms of profits. Carry out a one on one annual appraisal with every member of staff. Whilst it is a great opportunity to discuss any concerns that you may have, make it a positive experience. End on a high and make sure each team member leaves feeling invigorated and motivated. Be sure to give your employees a voice too. This is a great time for them to give you feedback and tell you anything that is perhaps concerning them. It is essential to listen and act upon the feedback.
Set individual targets or KPI’s for staff where possible. Whether it’s sales staff or your administrative team, all staff should be given initiatives to achieve. If you have a sales team, it’s a good idea to bring them on board with a lower basic salary but give them the ability to hugely increase their income via sales commission. Monthly and annual targets should be given in advance so staff are aware of what is expected. The most important thing is to make sure that any targets are achievable. If they are not, it makes the whole thing a bit pointless and will probably demotivate staff. Sales staff, in particular, are driven by money – or at least they should be.
Big Data is the Key to Boosting Profitability
Small businesses need to take a number of steps to achieve profitability. Big data is one of the best tools available to them. You should use big data if you are trying to grow your business, because it will help you monitor costs properly, ensure billing is accurate and boost revenue.