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Big Data for Small Businesses

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Two stories are provided in the November Inc magazine with “big data” and “analytics” used in small/medium-sized businesses at a cost of $1,000/mo and $50/yr respectively.

Starting to look like Moore’s Law applied to software-as-a-service, driving the cost down and the value up!

But regardless of price, the wisdom of building analytics into your business is spot-on. Consumer, or B2B, you need to be collecting data, running experiments, and looking at the results. At a minimum you can increase revenue, and possibly margin.

It is an old (and wise) insight that it is more efficient to sell to an existing customer than it is to recruit a new customer; analytics is the strategy that informs the tactics of doing exactly that.

It is also best when it is more of a lifestyle, than a diet. In other words, don’t look at this as a project (or series of projects)… it should be a core function of your business: collect data, innovate, measure.

Why Big Data Matters

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Recommended reading for all entrepreneurs… is this article on Big Data from the Harvard Business Review while most startups in the early stages don’t have ANY data to analyze, let alone enough data that you could call it “big data” and derive any meaningful insight from it…

It won’t be long before many “startups” have data stores filled with information (if you choose to collect it, even 500 customers will provide you with rich data)…

and analyzing that information, deriving insights from it, and acting on it (a three-pronged skill set that few people have… thus the article’s focus on how to find Data Scientists) will be ESSENTIAL.

I’m not talking about being competitive here, I’m talking about survival.

One retailer assumed from their extensive hands-on experience, that service person turnover was a key metric… that would determine customer satisfaction. Makes sense intuitively, eh? You want great service/counter staff, and you want them to stay.

Once they truly questioned their assumptions, re-ran their analysis and plumbed their sales per store… they determined service staff was irrelevant. Store manager turnover, however, absolutely determined if the location was profitable or not.

I’m sure my clients can relate, even though some of them have “smaller” businesses right now. Read and heed!

Doctor Heal Thyself

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I love that Norm Brodsky, long-time columnist and startup expert for Inc magazine… turned his formidable skills on himself, to diagnose the need for experiments and metrics in his own startup, the recently launched Kobeyaki.

Read this to get a taste of why (and how) they measured their new restaurant in order to establish profitability… and next they will experiment with location, in preparation for expansion.

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