Possibly the only thing everyone in business agrees on, is that money talks. Whether you’re looking at turnover or profit, the end game is the same – to make the numbers better.
What makes it incredible, is that so many businesses are happy to overlook obvious ways to boost those figures without having to chase more sales.
Trust me – it’s not as unlikely as it sounds.
Let’s talk about Data Quality
I often hear people talk about data quality, but in reality, its quality data we require. As the renowned quality expert, W Edwards Deming puts it. “Without data you are just another person with an opinion”.
What we should actually be talking about is improving the quality of that data, so that what it tells us is accurate and informs our decision making in a more intelligent fashion.
Profit fuels your business, so it stands to reason then, that the decisions you make every day must be based on accurate and relevant data sets. It’s the only way that you can reduce risk, reduce cost and increase the effectiveness of decision making. If you are relying on ‘bad’ data, then you will be making bad decisions with a high degree of certainty – which is bad for business.
Why your Business is like a House
If we’ve had a conversation, then you may have heard me use this analogy – but stick with me as it works.
It helps to think of your business like a house. There are many rooms in that house, i.e the different departments, the business intelligence, analytics, the reporting tools you use. But there is only one basement – your data!
The data is used to inform the analytics, compile the reports, plan the day to day activities and assess the business intelligence. In the same way that you need to develop good habits around the house to keep it clean and in a good state of repair, so too do you need good data management habits.
Quite simply, better data habits = bigger profits!
Maximising Profit and Minimising Risk
In order to maximise profit you need to minimise the risks within your business. To do so, you need to improve compliance, adhere to relevant legislation and make better decisions. When things go wrong, you need to ensure they are resolved in such a way that they stay fixed. In other words, deal with the root cause, don’t rely on a sticking plaster solution.
But before you can minimise risk, you need to understand where the risks are. This may sound simple but if you take a look at the Johari Window model, whilst you will have risks you know about, what about the ones you know you don’t know enough about. Or worse still, the ones you don’t even know you don’t know about!
The True Cost of Bad Data
Mistakes, or bad decisions made as a result of poor quality or inaccurate data, cost your business dearly. It’s not just the expense of correcting what went wrong from the customer perspective, you also have to consider the other, additional costs that you incur as a result. You may have to investigate complaints, make changes to systems or processes which involve extra work and maybe extra staff.
To put it into context, if your gross margin is 33%, then you have to sell three times the cost of the loss just to stand still!
So, my advice would be, stop chasing the revenue and letting waste flow out of your business. Recognise, Categorise and Repair your Data Weakness and see your Profits Rise.