Small Business Help

Know Your Numbers: 5 Keys to Small Business Success

Know Your Numbers: 5 Keys to Small Business Success

 

 

The phrase “Know Your Numbers” typically refers to measuring your personal health by knowing your blood pressure, weight, cholesterol levels, etc. You and your doctor can use these numbers to make sure you’re healthy and identify early indicators of potential issues.

The same concept applies to your small business. Some small business owners consider their business to be a success if their bank account is growing – or at least not shrinking. But that’s the equivalent of saying you’re healthy because you feel good today. Just like for your health, there are key metrics that will help you better understand your business and uncover opportunities and potential issues.

#1: Start Simply

You do not need to become a data scientist to make sense of small business metrics. But it is easy to get overwhelmed. So start simply and build from there.

Find a performance dashboard you like, such as the one provided by your point-of-sale system. In this Best Practices for Small Business Success series, we’ll use examples from the Manage My Business app because it is specifically designed to help small business optimize their results. But use whatever you’re comfortable with.

You already know your sales numbers, so start by looking at this metric from different perspectives. For example, a "heatmap" graph is an excellent way to visualize your sales by the time of the day as well as the day of the week. In the following example, it’s easy to see the busiest day is Saturday and the slowest hour is 4-5pm on weekdays – perhaps indicating the need to close an hour earlier on weekdays.

Similarly, sales trend graphs often provide great insights, especially when viewed from different perspectives. This next example shows sales on Wednesdays are declining slightly over time, which could indicate a normal seasonal trend or a potential issue to investigate further.

The key is to start by looking at a few key metrics (like Sales and Order Size) to avoid getting overwhelmed and frustrated, and then expand from there as you become more comfortable with your data.

#2: Only Use Apples-to-Apples Comparisons

Comparing today’s results to those a month ago can be useful as long as “month” is defined as “four weeks ago”. This is because the day of the week influences sales for almost every business. So comparing April 30 (a Saturday) to March 30 (a Wednesday) is typically not useful, but comparing April 30 to April 2 (both Saturdays) can be very useful in measuring growth.

The same concept applies to holidays, where Mother’s Day is May 8 in 2022 but May 14 in 2023. Holidays that are on the same date every year (Christmas, Juneteenth, etc.) are exceptions, where it may be useful to compare the same date year-over-year.

A similar issue comes up for intraday comparisons. It doesn’t make sense to compare results as of noon today to the entire day of sales yesterday.  However, a comparison of sales as of noon today to sales as of noon yesterday can be very insightful.

Oddly enough, most dashboards do not make it easy to make apples-to-apples comparisons. The Manage My Business app is perhaps the only app available to small businesses that is built to ensure apples-to-apples comparisons – including understanding holidays, as shown in this example:

#3: Keep Everything in Context

It’s easy to misinterpret or misuse data, especially when it’s taken out of context. You know your business well, so make sure all metrics are interpreted within the context of your business.

Let's consider the first example above where 4-5pm on weekdays is the slowest hour. Perhaps this is good because it allows your employees to start pre-closing work and leave a little earlier – reducing payroll costs while still offering convenient store hours for your customers. Or perhaps it would be better to close earlier. Putting the data in context will ensure you make good data-driven decisions.

Keep external influences in mind as well. For example, COVID-19 caused Order Size to increase for many small businesses as consumers bought larger quantities to reduce the number of trips outside the home. The Order Size then declined as life slowly returned to normal. A decline in this key metric is usually a negative indicator, but this external factor explains why it might not be a cause for concern in this situation.

Similarly, a major retailer of cribs saw a sudden drop in their crib sales some years ago and didn’t know what to do. Based on data from a market research firm, they discovered crib sales were down for all retailers, not just them. This market context prevented them from making a bad business decision (heavy discounting or discontinuing crib sales). Crib sales returned to normal within the next six months.

#4: Keep Asking “Why?”

Analytics are only useful if you can identify why something happened and apply that insight to improve future performance. Understanding why crib sales dropped (an unusual, short-term drop in demand) allowed that retailer to make informed decisions about its future. Not understanding why could have led to disastrous results.

As you’re looking at your performance data, keep asking yourself why something happened – regardless of whether it was a positive or negative change. Negative results tend to draw our attention, but there’s a lot to be learned about why performance improved as well.

For example, price changes can obviously affect sales. In the graphs below, it’s not clear why cappuccino sales (as a percentage of total sales) were flat or trending slightly up after the price increase while latte sales were trending down. Perhaps one was still favorably priced compared to competitors while the other became overpriced. Digging deeper into the “why” will help determine if additional price adjustments are needed.

It's a never-ending process, but that’s part of the fun of owning a small business. It’s a series of challenges that push you to find new and innovative ways to create great products and customer experiences. Continually asking “Why?” will often identify new ways to make your small business special.

#5: Trust Your (Informed) Gut

Most small business owners don’t have a business degree, but they do have an intense passion for what they’re selling – whether it’s coffee or antiques or fashion or whatever motivated them to start their business. As a result, you are a subject matter expert for your business and will have good instincts for how to run it.

Analytics complement your expertise by providing insights that may not be obvious from just observing the day-to-day business. Going overboard with analytics is just as bad as ignoring analytics. It’s the balance between expertise, instinct and data-driven decisions that will be the key to your business’s success.

Steven Roth is the creator of the Manage My Business app and best practices guides. He is passionate about helping "mom-and-pop" stores make better data-driven decisions by making analytics accessible and actionable.
Steven has been a retail consultant for 20+ years, including several years at Google. He is an expert in retail analytics and has helped build tools and services used by millions of retailers worldwide. He currently owns two small businesses, giving him firsthand knowledge of the challenges small businesses face daily.

Next Steps

Get to know your numbers by finding a dashboard that supports your business needs. Big retailers have teams of data scientists that do this analysis, but a data-focused mindset along with your existing expertise and instincts can give your small business a big edge.

 

Florida's Small Business Development Center

 

Treasure Coast Business is a news service and magazine published in print, via e-newsletter and online at tcbusiness.com by Indian River Media Group. For more information or to report news email [email protected]

 

Jul. 7, 2022|

Bank of America offers digital resources to help Entrepreneurs start and grow their Businesses

Bank of America offers digital resources to help Entrepreneurs start and grow their Businesses

New secured credit options, including a credit card and credit line, and the Start a Business Center digital experience demonstrate ongoing commitment to helping small businesses succeed

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Bank of America announced the launch of the Business Advantage Unlimited Cash Rewards Secured credit card, Business Advantage Secured Credit Line and the Start a Business Center – its latest products and resources for entrepreneurs looking to start a small business or build their business’ credit history.

“Bank of America is committed to providing small business owners with innovative solutions and advice that can help them grow their business and establish long term financial wellness,” said Sharon Miller, president of Small Business and head of Specialty Banking and Lending at Bank of America. “These latest offerings are designed to empower entrepreneurs by providing them with access to resources that will help them to start or strengthen their businesses.”

Business Advantage Unlimited Cash Rewards Secured credit card

As small business owners continue to navigate a challenging business environment, the Business Advantage Unlimited Cash Rewards Secured credit card provides a new tool to help them establish, strengthen or rebuild their business credit – all while providing cardholders with the benefits that matter most to their business.

The new credit card is available now and has no annual fee. Benefits include:

  • Client-determined credit line from $1,000 to $10,000
  • 1.5% cash back on all purchases, with no annual rewards earn cap
  • Preferred Rewards for Business eligibility, providing access to a wide range of valuable rewards, benefits and savings – all with no fee to join or participate

Secured Business Advantage Credit Line

Additionally, Bank of America will offer a Secured Business Advantage Credit Line for small business owners, scheduled to launch later in 2022.

The credit line includes:

  • Client-determined credit line from $1,000 to $50,000
  • Convenient access to funds via online banking, convenience checks and linked Visa card
  • Annual renewal fee of $150

“Straightforward and convenient access to capital is crucial to ensuring small business owners have the resources they need to succeed,” said Chris Wong, Small Business Products executive at Bank of America. “With the launch of the new Business Advantage Unlimited Cash Rewards Secured Credit Card and Secured Business Advantage Credit Line, Bank of America remains committed to helping our 11 million business owner clients build and strengthen their business credit.”

Start a Business Center Digital Experience

Bank of America has also introduced a new resource to assist clients with starting a new small business. The Start a Business Center digital experience guides existing small business clients and aspiring business owners on exactly how to start and run their new business. It also offers an exclusive discount on business formation for Bank of America clients through Incfile.1

The digital experience offers resources such as business plan templates, partners for critical services and access to Bank of America Small Business specialists. Clients can utilize tips and considerations on topics such as writing a business plan, business legal structures, marketing strategy and business financing options.

To view our small business resources, download the Bank of America app or visit bankofamerica.com.

Bank of America

Bank of America is one of the world’s leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 67 million consumer and small business clients with approximately 4,200 retail financial centers, approximately 16,000 ATMs, and award-winning digital banking with more than 54 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and approximately 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

 

 

Treasure Coast Business is a news service and magazine published in print, via e-newsletter and online at tcbusiness.com by Indian River Media Group. For more information or to report news email [email protected]

 

Mar. 28, 2022|

Florida small businesses are resilient, even in face of hurdles presented by pandemic

Small business owners are nothing if not intrepid. They demonstrate their flexibility no matter what situation arises. Their resiliency has never been more apparent than in recent months as they encountered setbacks related to COVID-19.
Feb. 24, 2021|