As a business owner or manager, knowing how to use data can, and should be, an essential part of your planning. LGA Partner and Head of Business Advisory Services, Ken Segal, discusses this important topic with Jim DeCesar, CPA, one of LGA’s data driven solution experts. Jim shares a few ways business can use data to make sure the are track for success. Data doesn’t have to be overwhelming! But it is an important tool for anyone who wants to guide their business in the right direction.
[Ken]: Hi, this is Ken Segal, a partner at LGA and head of its Business Advisory Services practice. I wanna introduce you to Jim, DeCesar. Jim’s a principal on our Business Advisory Services practice at LGA and a data driven solution focused subject matter expert. I wanted to take a few minutes today to talk about today’s topic, the crucial role of data analytics as it relates to risk reporting and optimizing revenues going forward. Jim, why is this topic relevant?
[Jim]: Uh, first off, it’s great to be meeting about this topic. This is definitely one of my favorite areas to assist clients with, um, as to why data analytics is so relevant. Increasingly businesses are being put in a position where there is an expectation of making strategic decisions that are driven by data. That expectation is coming from their lenders, from their investors, and they want to understand what milestones and targets the company is tracking and how they’re tracking.
[Ken]: So it’s not one size fits all.
[Jim]: Exactly. Each company will most likely share some KPIs, some of those key performance indicators with its competitors in the marketplace, but a number of those KPIs will be relevant to the company: number of employees, where they are in their go-to-market strategy for customers, um, as well as how they interact with their customers. Is it, is it in person? Is it electronic? Is it a mix of both?
[Ken]: Interesting. So what are the key data elements that business owners should be focusing on to ensure that they’re on track and achieving their performance goals?
[Jim]: So this is the fun part in my mind. And this, again comes back to the customization. I think your strategic team needs to sit in a room and have an honest discussion about what the targets are and which of those targets are the priority to, to monitor and measure on a monthly basis on a quarterly basis. And using that they then want to identify those KPIs and customize those KPIs. It could be revenue per employee. It could be revenue per customer. It could be revenue per month. I mean, there, there are various items that would be key in understanding whether that business is going to be successful.
[Ken]: So what would be the key questions that business owners should ask about themselves and other executive team.
[Jim]: Once that executive team is meeting and they’re really diving into data analytics. I think the biggest question to ask is, does my data work for me? Um, businesses are collecting so much data right now, whether it’s internally or through their vendors or through some of the systems that they use. And, um, it’s really important that they, that they understand what the, what that data is, and then make sure that they have it. They have it at those meetings. They have it prepared for those meetings, having dashboards. They have it in reports that then allow them to utilize that time as an executive team to make those strategic decisions.
[Ken]: Hmm. So I understand now how data analytics manages risk. The important question, a lot of people’s minds is how is data analytics actually driving profits and revenues?
[Jim]: It’s a great point. And it definitely helps companies manage risks. But I think as long as they’re there presenting that data to themselves, that executive team in a fashion where it’s easily usable, and again, they feel like they have the tools at their fingertips, then they can focus on the factors that are going to increase top line revenue or are going to increase profit margin, or are going to look for redundancies in their operating expenses and ensure that they’re, they’re cutting costs where necessary. And then they can manage both the risk and the P and L and drive that profit and make the company successful.
[Ken]: Interesting. This is very helpful. If there’s anything we can do to help you please reach out. As you can tell Jim has a lot of expertise and can advise you on how data analytics can be a powerful management tool, always reach out to LGA and we’ll talk to you soon. Thanks, Jim!
[Jim]: Sounds great. Thank you.