Here’s a staggering fact: an estimated 90% of startups fail.
Most often this happens in their second through fifth years, which is when the company has
launched a product and is time to execute.
At this stage, resources continue to be very limited and there is little room for error.
It is up to leadership to adopt a strategy that will turn challenges into advantages.
But that is easier said than done.
Very often, entrepreneurs find themselves caught in what we like to call the ‘’live
to fight another day’’ trap.
With multiple pressing operating issues, few skilled employees, and a bottom line in red,
startup founders and small business owners, in general, feel that investment in data strategy,
data collection, and data analysis is a luxury that they simply cannot afford because they
need to dedicate their energy on actions that will produce results now, rather than in a
year.
This mindset is reminiscent of Gil Amelio, who was Apple’s CEO before Steve Jobs took
over.
In a question on how the tech company was doing, he famously said: “Apple is like
a ship with
a hole in the bottom, leaking water, and my job is to get the ship pointed in the right
direction ”. If you’re the captain of a ship that’s
leaking water, would you try to point it in the right direction or would you try to do
something about the hole in its structure instead?
Similarly, if you run a business without knowing where exactly you’re headed, would you continue
to work harder but be essentially blind to growth, or should you invest in data that
will point you in the right direction?
Yes, small businesses have very scarce resources – and it is precisely why they cannot afford
to waste any of them.
The only way to ensure that they make the most out of what they have is to adopt data-driven
decision-making.
At this point, you might be asking, “Can all small businesses benefit from data?
Isn’t this framework mostly beneficial for digital startups rather than traditional firms?”
That’s a common misconception.
In reality, if your company needs to understand its customers and find ways to offer a better
product, or if you are interested in running a business that is more operationally efficient,
then you certainly need to give data strategic importance.
Let’s see how data can help a traditional and a digital business respectively through
a real-world scenario – consider a chain of 3 brick-and-mortar bookstores and an exclusively-online
book retailer, all of which started operating a year ago.
Presumably, the brick-and-mortar stores do not have as much data as the digital business,
which puts them at a slight disadvantage.
Nevertheless, management has multiple options to utilize data and begin collecting insights.
What they can do is: - Place sensors that detect mobile phone signals
on shop windows to collect information on footfall to ensure stores are in areas with
sufficient customer traffic.
- Monitor how many people enter the stores in order to experiment with promotional messages
and different arrangements of shop windows to try and attract more engagement.
- Combine the collected information with the number of store visitors who end up purchasing
one or more books.
In this way, management will be able to gain an idea of the conversion rate for each store
and explore whether this benchmark is consistent across all three locations.
- Use the insights to understand if and why one location is doing much better than the
rest and then apply these good practices in the other stores as well.
- Analyze sales receipts and gather this data in spreadsheets – or a BI tool – in order
to find the relationship between store discounts and volumes sold, thus gaining an idea about
price sensitivity.
- And lastly, build a dashboard that helps track performance at the store level and shows
how different genres and types of promotions are performing throughout the year.
Data dashboards help employees work towards specific targets and hopefully this will help
the team gain a sense of common purpose.
Do you see how even brick-and-mortar businesses can benefit from data-driven decision-making?
Now, let’s consider how data can help the digital bookstore:
- Employing Google analytics allows them to monitor incoming traffic and establish a conversion
rate per unique website visitor.
- Placing UTMs to all external links to the website can help them understand which marketing
ad campaigns and social media efforts represent the best opportunity.
- Experimenting with different versions of sales pages through A/B testing.
- Building recommender ML models that help them send emails to their existing clients
with relevant book recommendations, increasing the chance of repeated purchases.
- Developing a predictive model, based on demographic data and recorded interactions
from the website, to determine which clients are most likely to purchase again.
The company can then use their emails for retargeting with Facebook, Linkedin, or Google.
These were just a few examples of how small businesses, both physical and digital, can
benefit from a data-driven approach.
Of course, there are many more opportunities to take advantage of data in both cases.
In our next video, we’ll discuss mid-sized businesses.
So, make sure you subscribe to the channel and click the bell icon to receive a notification
when it’s up!
Please remember that, before you reach an advanced stage of data maturity in your organization,
it is much better to focus on traditional forms of data analysis.
Becoming a truly data-driven business is a long and winding road, yet the journey is
very rewarding.
We hope this video inspired you to take on this challenge!
One of the best ways to prepare your team is by relying on the 365 Data Science program.
We offer courses in Data Literacy, Data Strategy, Python, SQL, and Excel fundamentals, as well
as Business Analytics, Tableau, Power BI, Machine Learning, and many other topics.
What is more, we’re constantly adding new content, such as the upcoming Data-Driven
Growth Course with industry professionals Tina Huang and Davis Balaba who will teach
you precisely how to transform your business into a data-driven enterprise.
Find out more about the program, resources, and other services from 365 Data Science by
following the link in the description.
We’d be glad to be part of your company’s data-fueled journey to success!