“Information- not data”
The 3rd of a 4 Part Series on the Key Focus Points in Running a Business
In a recent posts, I mentioned the 4 key ingredients in a recipe for small business success and talked about the importance of Cash Flow- “Cash is King” and Strategic Planning.
- Cash Flow
- Strategic Planning
- Information- not data
Information – not data
Now I want to talk about the importance of gathering and using data for information. Many companies are “hog-tied” just keeping up with compliance requirements from various federal, state and local agencies. This unfortunately does not leave much room for gathering information that is most useful in running a successful business when cash is tight and the bottom line is shrinking. Worse yet, there could be times when good information may prove to be most useful in guiding the company through hard seas. Many companies have data available and are not using the data for information. My experience has been that with a small amount of effort, companies are able to convert data to information.
Identifying your KPI’s (key performance indicators) will help decide what information, how often and how much you need. Everyone in your company should be aware and understand the impact on KPI’s. Progress should be reported to all – further enhancing company culture. The new information should become available without too much disruption in daily activities. I tend to focus on pricing, costs and balance sheet management. They all have relative importance depending on the business cycle and what it is driving the market be it marketing, technology, supply chain management, etc.
I don’t know anyone who has gone to a local hardware store to find parts for a plumbing problem and not had to return to the store to get the exact parts needed to fix the leak. Now when I go to the hardware store, I take pictures of the problem, show them to an associate and get immediate and satisfactory help. I go there with information, not just data. Saves me several trips to the hardware store! This may seem as a cartoonish example of the importance of information. Nevertheless, business owners should be able to visualize their KPI’s and use information to their advantage.
Please stay tuned for my next post re: “Accountability”.
Dan Makuch, CA