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Importance of Data in Business

December 24, 2022

“You can’t improve what you don’t measure.” This nugget has been attributed to Peter Drucker, and it is mostly true. Soft skills like enthusiasm and communication are important success factors in business, but they are subjective and not easily measured. Every sector and industry has its own set of KPIs and metrics which provide meaningful insight into its operations. The importance of data in business can not be overstated. It’s critical to have information about the performance and output of all departments. Here are some key reasons for the importance of data in business, and how strong reporting systems can bring value to your company. 

Data for What is Working 

Startups grow and change fast. One importance of data in business is knowing whether changes are making an impact. Is that new training program improving the closing rate for the sales team? Did that software transition increase processing time? Is that marketing campaign generating more leads than the last one? Without these metrics, we don’t know whether to continue, tweak, or change direction. 

Using Data for Planning and Forecasting 

When it comes time to think about coming quarters and fiscal years, data is essential. When is it time to expand the sales team, or bring on more programmers? Using data for planning and forecasting means seeing the big picture, and acting proactively to build your business. An importance of data in business is planning ahead to prevent bottlenecks and capacity issues. 

Communicating with Financial Institutions 

Dealing with banks and lenders is a fact of doing business. Financial institutions touch on many areas of a company. It could be an overdraft to cover gaps in cash flow, arranging credit terms with suppliers, or getting a loan to fund the next stage of expansion. In every case, communicating with financial institutions means having accurate reports and a big picture of performance. 

Pro Tip: This data is also valuable when it comes time to talk to letting agents about securing your first office lease, or upgrading operations to a bigger commercial or retail space.

Pitching to Investors 

If your startup hasn’t been pitching to investors yet, your time may soon come. In preparing that slidedeck, angel investors want to see more than your unique niche and exciting offering. They will want to see exactly how your company has been performing, and a forecast of where you expect to be in the coming fiscal quarters. Another importance of data in business is identifying gaps which can be resolved with targeted investment, which is exactly the sort of information you want to have when pitching to investors! 

Mining Data from All Sources 

Data can be pulled from many sources, like accounting systems and website analytics. Contracts are another valuable source of information about customers and sales. What if contract data can be mined to provide portfolio analytics on demographics, KPIs, and other meaningful metrics? 

Harness the importance of data in business by leveraging information in your contracts. As contract experts, we know there are many mistakes startups make. <link to Contract Mistakes You May be Making> The Cheers reporting analytics provide a big picture of portfolios in real-time. Get started today with a startup programme of ready to scale contracts which provide you with analytics and experts insights. 

Future blog article topics 

● Understanding the 3 Stages of Contracts (can link to Contract Mistakes You May be Making) 

● Why Not to Cut Corners with Legal Advice 

● Case Study (story of a specific example of using Cheers/data analytics or testimonial to the efficiencies of getting the programme)

The type of business and their turnaround

There are three types of business: Startups, SMEs and Enterprises. They tend to use the same structure when it comes to contracts, but there are two variables that apply differently: budget and risk aversion. 

While Startups have a small budget and risk aversion, Enterprises have just the opposite. SMEs are right in the middle.

The average for a deal negotiation in a Startup is days or weeks. Startups 3 months and Enterprises 6 months to 1 year. 

When it comes time to make things official, you want to look like the professional you are.

The bottom line is that prioritizing your time on closing deals is your highest impact task. Focus, standardize and close the deal.

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