Robust data or a ‘feel’ for the business? It’s not either-or when you want to improve your business
Released On 18th May 2022
Robust data or a ‘feel’ for the business? It’s not either-or when you want to improve your business
If you're ready to improve your business, what's on your to do list? Think about opportunities to reach new customers or improve productivity? Check out your Xero accounts and put together a forecast? Let's look at each of these in turn.
Entrepreneurs pride themselves on their intuitive understanding of business
The business owners we work with really understand their customers. They work closely with their customer-base, knowing what they're prepared to spend and what they'll expect in return.
However experience also tells us that those individuals often don't enjoy the administrative burden that comes with running a business. They'd rather be making sales, delivering first class customer service or developing a great new product.
Business analysts rely on the data to show them how a business is doing
An analyst can identify some extremely useful insights for your business data, including:
- sales trends (are they upwards? seasonal?)
- margins (what is the gross profit on each of your key product / service lines / customer groups / locations?)
- utilisation (what is the return, or profit, on your investment in equipment etc)
- productivity (what revenue and profit are you generating per hour on per person in your business?)
They can also check if some of the assumptions an entrepreneur makes are sound. For instance, if you though you were pricing on a particular basis (e.g. a 25% mark-up), is this reflected in your accounts to show the same?
Business data can tell you the history, but not the story
Even the best accountant won't glean everything from your set of accounts. The data won't tell them:
- why you set up the business
- what your sort, medium and long term goals are
- what matters to you as a person.
Even the best available AI can't predict the future, although it can help you improve your business
At the moment, the best available artificial intelligence forecasting tools on the market can:
- often provide a cashflow-forecast predicting future sales
- predict cash available
- take account of recurring costs.
However it won't know why you've generated the sales you have so far, nor will it understand how much scope you have to increase sales. In addition, because of the complexity of forecasting, the available tools have difficulty:
- including payroll and corporation taxes in forecasts
- accounting for invoice finance
High quality business data can either confirm or refute your 'gut feeling' about a business
At Wessex Commercial we’re firm believers that you need both a ‘feel’ for your business supported by high quality data to make the most progress.
As one of our Devon-based clients says:
Because I’m feeling much more confident about Xero, I’m able to focus on growing and developing our business.
We know you can’t simply grow or improve your business by number-crunching. However with a good understanding of where your business is just now, it’s much easier plan ahead.
Our team can also model your ‘what-if’ scenarios. For instance, what happens to profits and cash if you:
recruit a sales person
take someone on in customer service
lease rather than buy
increase sales by 10%
reduce time time it takes to get paid by 7 days
Ready to improve your business?
Our team will take a look at the data in your Xero account. They’ll find out about the key issues facing your business. And most importantly, they’ll provide you with an action plan recommending steps you can take to improve your business results.
