More companies are investing in big data than ever these days. Unfortunately, many companies still don’t appreciate the benefits that it provides.
One survey published on CIO found that less than a third of companies have reported that big data has buy-in from top executives. If you are running a business that has not yet adapted a data strategy, you should keep reading. You will get a better sense of the reasons that you should make investing in big data a top priority. As a smaller business, you may benefit even more than
Big Data Has Provided Massive Benefits to SMEs
Owning a business is an all-encompassing job. As an entrepreneur, especially if you own a small or medium-sized business, it can be overwhelming to oversee every business activity and efficiently lead a team of skilled individuals to ensure the company will grow and be profitable.
Even if your business is not necessarily new but has been well-established, your role can still be highly challenging and difficult during extremely busy periods. For this reason, it is of the utmost importance to streamline operations, maintain motivation and improve productivity as much as possible, while taking into account your employees’ needs and current trends.
This is where big data technology has become so important. A report last July found that 30% of companies have a formal data strategy. These companies tend to have a much better ROI than those without one. One study actually found that companies with a data strategy had 84% higher revenue and 66% higher profits.
However, knowing how to execute a data strategy isn’t always easy. Data-driven companies need to know how to make use of digital tools to facilitate and support various business operations, such as accounting software, employing different work practices if it is beneficial to the business, and making sure you stay on top of current industry and market trends so that your small or medium-sized company stays relevant. T
These are but a few of the responsibilities of a business owner and the complexity of a business, regardless of its focus. Fortunately, big data tools can help streamline most of these processes. There is no denying that you need to ensure productivity and a seamless running of the company, which means adopting innovative and helpful tools.
While every business activity and operation are vital for its growth, it is essential to discuss the financial aspect. For small and medium-sized businesses, especially if they are start-ups, managing business finances can be a more significant challenge than there is for corporations that have an extensive and comprehensive accounting department.
For this reason, we have compiled a list of six tips to use big data to bolster financial management strategies. These tips are beneficial for any small or medium-sized business owners who find themselves struggling a bit at this aspect:
1. Making Decisions More Easily
Businesses should aim to be adaptable and flexible. Only this way can you survive disruptive events – such as a global pandemic – various changes and remain relevant when new trends emerge. Looking at how specific companies have managed to overcome the challenges resulting from lockdowns and various pandemic restrictions, it can be easily noticed that the main reason why this happened was adaptability and not being afraid to make difficult decisions.
This means having to make budget cuts where necessary, especially during and after a pandemic that managed to disrupt many businesses’ performance, especially small and medium-sized ones. When you manage to recover from the initial shock, you must make another series of difficult decisions to emerge stronger and be able to recover. For example, many companies have kept the remote or hybrid work practice, as it revealed that it benefited the business.
This is possibly one of the most important benefits of using big data. Data analytics technology helps companies make more informed insights. These include:
- Using predictive analytics to forecast industry trends and customer behavior, so they can allocate resources effectively.
- Using data mining technology to evaluate publicly available records on applicants to make better hiring decisions.
- Using internal data to assess the ROI of various assets.
There are a lot of great reasons to use data analytics to improve organizational decision-making.
2. Use Accounting Software Applications with Sophisticated Big Data Algorithms
Digital tools and online software programs are incredibly effective in streamlining business activities, supporting various operations, and even facilitating communication – especially when you own a company that employs the hybrid paradigm or works entirely remotely. The most reliable accounting programs have highly advanced big data algorithms that offer exceptional functionality.
When it comes to effective financial management for your business, you should consider using software like QuickBooks, that has every aspect of a business’s finances in one place. QuickBooks has some of the most advanced data analytics features of any accounting applications on the market. With such a reliable digital tool, you will be able to manage your expenses more efficiently, pay your taxes on time so you won’t have to worry about this anymore, track every business transaction, and so on. As a small business, you may not have incredibly high amounts of cash flow. However, this doesn’t mean that you should omit the good management of your business finances.
3. Make the Best Investments to Drive Growth
Just because you have a small company doesn’t mean you have to restrain yourself from making any investment that could help the business grow further. For this reason, you should make sure you factor in when handling your business finances, the fact that you should be prepared in case there is an investment opportunity. Therefore, setting money aside for this purpose can help the company achieve a healthy financial situation.
Any forward-thinking business that prioritizes innovation, regardless of its company size, should also prioritize investing in its future. This will improve the company’s services and the quality of its product and offerings, which will earn the loyalty of its customers. Therefore, smart investments can generate growth and financial health, and small and medium-sized companies should also prioritize this.
Data analytics has made it a lot easier to meet growth objectives. Many companies use big data to forecast future market sizes for various goods and services. This has helped them decide which markets to pursue. They also use data analytics to anticipate future barriers to entry in those markets, so they can time their investments to get the most bang for their buck.
4. Properly Setting Owner Compensation
Entrepreneurs and business owners of small and medium-sized companies often forget – or better said, overlook – the fact that they must pay themselves as well. But it is of the utmost importance to include your own salary in your business finances. This is beneficial both for you, as you should and must be paid for your hard work, and the business, as you maintain an organized financial management.
Therefore, you shouldn’t allow any day-to-day operations to become more important. Indeed, it is crucial to dedicate your resources to all business activities and functions, given they are all equally vital for the seamless running of the company. But just as important is your salary and ensuring that both business and personal finances are well-organized.
Data analytics can also help owners decide how much to compensate themselves. They can forecast future cash flow and investment needs, so they don’t take too much out of the equity.
5. Using Analytics to Improve Your Credit Score
It is a common business strategy to obtain loans, as they can help you with better influx so that you can cover all your expenses and keep investing in your company’s future. At the same time, loans can be used effectively to boost cash flow, which helps you pay everything on time, including salaries and suppliers’ payments.
But an essential and noteworthy mention would be to always make sure you pay off all your debt or try not to exceed the deadline by too much. This will help you maintain a good credit score – a crucial aspect for businesses. Good credit scores are necessary when making new investments or purchases.
Big data can also help improve your credit score. You will be able keep better track of your financial obligations, make sure you have enough cash on hand by anticipating future cash inflows and automate payments to avoid getting your credit dinged for missed payments.
6. Make Your Tax Payments a Monthly Expense
There is no denying that paying business taxes can be a stressful aspect for business, even for SMEs. This is because it can be a great challenge to save enough money and put aside a proper amount so that you can cover your estimated quarterly payments for company taxes. But don’t worry, there is a business hack you can do to make this part less stressful and more straightforward.
For the good financial health of your business, you should consider your tax payments a monthly operating expense. This way, you don’t have to set aside an estimated amount so that you can pay every quarter. Instead, you could pay every month and offer yourself peace of mind when it comes to tax payments, as well as financial health for your business.
Companies have found that big data can help them with their taxes as well. They can use data-driven accounting solutions to automate their payments and anticipate future tax obligations based on future cash flows.