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There is a lot of big data in your small business.
OK, maybe not the Big Data that Google and Facebook capture… rather, the everyday data that, if you could harness it, would give you big insights and even bigger results. That’s what we consider big data in small business.
The key is harnessing that data– and there is one place in your organization that has a lot of that information: It’s your accounting system.
Many small to mid-sized businesses– even those doing upwards of $10M, don’t realize the answers they are looking for are often hidden in their everyday data. Most businesses we work with start out only seeing one level of their financials: overall sales, gross margin and net income, and struggle to know how to fix things when the results they are getting aren’t up to par. With everything generalized into big “buckets” on their financials, it’s hard to troubleshoot and make the needed changes. (We call these “flat financials.”)
But there is a better way.
Think of a prism. When you shine white light into a prism you get a rainbow of colors out of it.
Your accounting system can be the prism for your data. The way you put your data into the system can dramatically affect the data you get out. When your accounting system is structured properly and you utilize all the available “tags” on the data you put in, you will start seeing the “rainbow” of insights you’ve missed all along. Better visibility to this data means you’ll be able to start making better decisions and focus your efforts on fixing problems. We call that the Prism Effect.
Here are just some ways you can slice and dice your data to get better information:
- Customer Profitability
- Job Profitability
- Product Line Profitability
- Profitability by Division
- Sales and profit by channel
- Profitability of sales rep’s portfolio
The list can go on… The key, of course, is knowing how to get the data into the system so you can get it out– and making sure there is some quality control to ensure everything is being entered in the right buckets. (If you don’t know where to start, give us a call.)
With a little patience, diligence and time, the information you are looking for will start to reveal itself. So don’t overlook the importance of the everyday accounting entries. The fact is, you’re sitting on some big data, and when you use your accounting system like a prism, you’ll get insights you never thought you could.