While big data remains the province of large corporates and governments, real-time data is more accessible to SMEs than ever before, SmartCompany reports
It’s allowing a generation of business owners who’ve had to rely on experience and gut feel, to transform their business into data-driven operations, and grow their revenues and margins in the face of difficult economic headwinds.
Regardless of industry, across Australia businesses can be divided into haves and have-nots by the accuracy and recency of their data. For those running on gut feel, or how they’ve always done it, a perilous combination of economic drivers could push them to the wall.
With every news story headline, the outlook seems to get more challenging for SMEs across Australia. With supply chains stretched, prices rising, and skilled employees impossible to find, there are pressures across every single facet of business.
Unfortunately, if you believe the forecasts — it’s likely to stay that way for a while yet.
It seems that in the ‘lucky country’, business owners are confronted with a never-ending set of challenges, and to make money in the current climate, good data, far more than good luck, is required.
In the current environment, and for a long while into the future, the divide between those who have data and those who don’t, is akin to a forecast about who will (and won’t) thrive, or even survive. While big data remains the province of large corporates and governments, real-time data is more accessible to SMEs than ever before.
It’s allowing a generation of business owners who’ve had to rely on experience and gut feel, to transform their business into data-driven operations, and grow their revenues and margins in the face of difficult economic headwinds. The Xero Small Business Insights Report highlights just how tough conditions are for SMEs, and how important good data is. Its July edition (2022) says that 92% of Australian businesses had at least one month of negative cashflow in 2021.
Worse, on average Australian SMEs experienced negative cash flow 4.2 months out of 12!
Those numbers are already terrifying, and that’s when inflation was below 3% — and costs were a lot more predictable. With inflation trending to an average of 7% this year, businesses that don’t adjust their pricing and methods to account for a significant hit to their bottom line, are really going to struggle.
For some industries it’s even more important, with the ABS saying that House Building Construction input costs were up 17.3% overall in 2022, (including 24% increase in the price of timber, and 18% for metals). Manufacturing inputs were similarly up 17.7% over the same period.
With such drastic changes to the price of materials companies that don’t have accurate daily data are taking an existential risk. It’s now more apparent than ever that being an excellent tradesman, be it chippy, sparky, plumber or boilermaker, is simply not enough to guarantee you a successful business — you have to know your figures almost daily, or you’ll be putting your livelihood at risk.
Luckily, over the last 15 years, led by the likes of accounting tech giant Xero, SMEs have far greater access to tools that can provide them with real-time data and insights than ever before. Whereas 20 years ago, a business owner would have to wait until 15 days after the end of month to know how they did last month, these days you can have a daily P&L and balance sheet.
You can even get it by job, and by customer!
With the right tech stack, business owners have access to the most incredible array of data to help them make decisions, and not only survive the inflationary cycle, but to double down on the profitable parts of their business, and trim the busy work that costs money, or is at best break-even. The key to getting this data is to ensure your systems for it aren’t an afterthought, but an integral part of your day-to-day.
While getting this right takes time and effort from the whole team, the businesses that do it well are the ones that will prosper in any conditions. There are small businesses in this country with a back office completely filled with screens showing dashboards on the performance of their business units, and without fail, they’re the ones that are growing, and profitable, every year.
On the other hand, those companies that run by checking their bank balance each day and getting a monthly P&L, are flying blind in the scariest conditions we’ve seen for a while.
The Great Data Divide is possibly the greatest predictor of performance over the coming few years, and every business owner needs work hard to cross to the right side. Fortunately, in the case of this divide, there is a bridge that everyone can cross.
Define your success with Salisburys
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Tailored for each business, our program provides business owners with the support structure and key tools they need to achieve their goals while holding them accountable for achieving these goals in the agreed timeframes.
Read more here or call Salisbury’s Business Advice team in Albury on 02 6041 3014.