By Darren Upson, Director of Small Business, Xero
Big data has become a real problem for small business. The sheer volume of customer data, has become so vast, that for many businesses it’s virtually impossible to manage. And this problem is only going to get worse as the businesses grow.
When it comes to getting the most value from the data you do have, it’s not the volume that counts but quite the opposite. When entrenched by an ever-growing database of customer information, the task of separating the wheat from the chaff can be extremely challenging.
As a result, small businesses often find themselves using information that’s outdated or irrelevant – a tendency that invariably hinders, when it should be helping growth.
If you’re an entrepreneur, you’re no doubt wondering how you can tackle the data minefield. The best place to start is to stop relying heavily on historical information. Instead, analyse live data as much as possible. Once you can access your core business data in real time, you can make better recruitment, investment, and business decisions: decisions that can keep the lights on and enable growth. Here’s how:
Financial fitness
One of the more interesting applications of real-time data is its ability to foster better financial management. Modern-day cloud accounting software can ensure maximum accuracy and speed to allow you to do this. By using an automated bank feed, transactions can be recorded in your accounts once updated: this means, whenever you log in you’ll have instant access to the status of your cash flow.
This gives you a serious operational advantage: you can pay (and get paid) more quickly, giving you the opportunity to cultivate better, mutually enriching relationships with suppliers and customers alike. Where other companies are wasting time doing paperwork, you’re adding real value to your company. When they’re crunching numbers, you have the time and resources to win business.
You can also figure out exactly where and when money is being spent. If one area is seeing particularly high returns, the system will alert you – and give you the opportunity to allocate more funds. If another area is underperforming, you also have the chance to redirect the investment somewhere more profitable. You can also send out reminders to clients who are approaching payment dates – so you don’t lose out on revenue or waste time chasing payments.
Team collaboration
Historically, accountants and small businesses have had the same relationship that homeowners and pest control experts have: there’s no communication until you want to control a pest invasion. The entrepreneur sends the email, the accountant reacts to it, it gets passed around, and a day or two elapses before the matter is resolved.
Cloud accounting solutions like Xero, deliver a much more collaborative and useful approach. When the small business and their advisors can both access shared real-time information, nobody’s working from outdated, duplicate information or wasting time exporting and importing. Decisions can be made instantly and with scrupulously correct information.
And this is more important than you might think. A small business owner is only as good as the decisions they make. Real-time data gives them the time and insight they need to make the right calls.
