Today’s business landscape is much different than it was a few decades ago. The abundance of technology alone has greatly changed how businesses operate. One of the best additions to the workplace for business owners and investors alike is business analytics. Analyzing big data is a good way to fuel fact-based decisions. More importantly, the insights data often offers can be used to create detailed and insightful business plans.
This article looks at business analytics, how it is used in today’s businesses, and how it can help people upgrade their business plans.
What is business analytics?
One might be familiar with the terms ‘business’ and ‘analytics’ separately, but what do they mean together? Business analytics, when broken down to its simplest form, is the process of collecting and analyzing raw data in order to draw insights from it. More specifically, the goal is to generate and analyze relevant and accurate data for the business in question.
Note that not all information is good information. Sometimes data is collected in a poor manner, or was generated using inaccurate techniques, both of which render it useless. Professionals known as data analysts are trained to vet data to ensure that it is worth analyzing before they draw any conclusions.
Business analytics also involves taking the raw data described above and pulling the most important bits out to present to the rest of the company. Business data analysts are typically responsible not just for collecting and reading data, but also interpreting it. To the untrained eye, large subsets of data look like a lot of numbers, and not much else. To the data analyst, it is the key to helping businesses make more informed decisions.
To briefly summarize, business analytics is the process of analyzing a large amount of raw data in order to glean insights from it. These insights, in turn, help management understand the potential benefits and drawbacks to certain business goals and strategies.
What are business plans?
Business plans are an important part of building strong businesses. More specifically, a business plan consist of a document defining the organization’s overall goals, as well as how it intends to complete its objectives. These documents are targeted at both internal and external audiences, including investors, employees and upper-level management alike. From small endeavors to large enterprises, the clear and effective goals and operations defined in business plans are critical to the success of a business.
Some people believe that small businesses do not need business plans, but that is not the case. In fact, small businesses can benefit from plans just as much as larger organizations. New business owners often have an especially difficult time defining objectives and meeting goals, for example, and business plans make the process easier.
Business plans are important, but the takeaway now is that business plans are tools that enable businesses in all industries — and at all success levels — to thrive. Business analytics can also be used to inform evidence-based business strategies.
Why are business plans important?
Business plans are important for a few different reasons. Firstly, they can form new ideas, and help rework already established business layouts. There are also quantifiable reasons why business plans can benefit a business. Let’s take a closer look at the importance of business planning.
Whether starting a new business or simply looking towards the future and revising business goals accordingly, business plans impact the way one does business. Creating a business plan should be one of the first things people do when planning a business, and if they already have a business, revising their business plan after a bit of time on the market is a good option. Why? Because business plans function like a GPS for businesses.
What do business plans typically contain? The good news is that business plans can be incredibly flexible, depending on the business in question and the overall goals of the people running them. A ‘classic’ business plan includes milestones, expected growth estimates and potential products and services to be added to the business at some point in the future. Other business plans might do away with some of the information traditionally found in them in favor of something more goal oriented. For example, businesses in flexible industries, where changing business operations on the fly is possible, might not worry too much about defining everyday operations. Instead, they will focus more on the goals they want to meet.
Regardless of the exact information one includes in their business plan, the overall function is the same. Business plans serve as reminders of the direction a business is headed and where it will go next.
Securing funds is an incredibly important part of starting a business. Even if one has the capital to run the business entirely on their own, attracting investors is a good way to up the valuation of their business and, potentially, to add more funds to their operational budget. But how exactly does one find investors and convince them to invest?
To those who feel lost at this step, do not worry — many people do. The truth is that most of today’s investors want to see a clearly written business plan detailing the organization’s goals as well as the steps they will take to meet them. They want to know that the owner has put thought into the future of their business and has a stake in its success or failure. Business plans are a good way to not only show that they are invested in the business but also to help investors see the ‘big picture’. People are more likely to invest when they feel comfortable and excited about a project, so creating the best business plan possible shows investors exactly why this business deserves their time and money.
Why is business analytics in business plans important?
Now we have a good handle on business plans and business analytics separately, but why are they often combined? There are a few different reasons that business analytics is important to business plans. On a broad level, business analytics helps inform different areas of business plans.
Here are some specific reasons business analytics should be used to build a strong business plan, to serve as the foundation of an organization:
Gaining insight into specific markets
The first reason business analytics matters when building business plans is the insights it can give into specific markets. Businesses with access to their customers’ ‘digital footprints’ can better understand who uses their product or service, and why. What population drives sales and returns to reinvest time and time again? Information about purchasing and browsing behavior, preferences and needs can all be pulled from business analytics data.
Business success depends on new information that is clearly communicated. It is not enough to simply network with potential investors and give a summary of a business. In order to attract customers, clients and funding, a business leader must have useful information that puts them ahead of everyone else. Business analytics can help with diving deep into specific markets to build a detailed business plan full of relevant information.
Making informed decisions
Business analytics fuels data-based decisions that offer businesses the ability to make quicker decisions based on accurate and up-to-date data. It also helps businesses avoid spending money on inefficient operations, strategies and marketing campaigns. Including this information in business plans helps build a solid foundation upon which businesses can thrive. Instead of overhauling the way operations run or completely changing business practices due to unexpected difficulties, businesses can construct plans that are based on reality.
From well-informed business practices to streamlined daily management choices that make sense and support the business’s objectives, using business analytics to form the roots of the business plan sets organizations up for success from the start. The one caution to be added here is that the quality of the data being analyzed matters. This is explained earlier in the paper, but it bears repeating. In order to make use of business analytics to inform a business plan, one must begin with good data. This is why business analytics professionals are indispensable in defining data searches and interpreting the resulting raw data.
Refining marketing campaigns and business strategies
One of the most effective tools for business growth is data-informed marketing campaigns and marketing strategy. Business analysts use a variety of consumer information data, such as consumer trends, point-of-sale transactional data and online shopping habits, to determine how effective marketing efforts are and where efficiency and effectiveness can be improved. Even more useful than increasing profits alone, this kind of data also allows marketers to create strategies for improving brand loyalty and meeting high expectations in terms of business growth.
It is important to note here that this kind of marketing requires a bit more than business analytics to succeed. Professionals of management consulting are also important to the process. If using data to boost marketing campaigns, in other words, one needs more than accurate data.
A comprehensive management degree can offer a strong foundation. Accredited courses like those offered at Spring Arbor University are a good place to start. It is important to reach out to representatives of potential programs to make sure classes on utilizing business data are included. Upon completion of the degree, graduates are ready to make full use of business analytics to boost their campaigns and help their business grow.
All of this is important to crafting business plans in a few different ways. First, the knowledge businesses can glean from properly analyzed data can help them better understand their audience. Once they know who to sell to, they can create detailed marketing options. Including these in their business plan can help them stand out from the crowd when looking for funding and can also make their plan more useful in the future.
Streamlining operations/minimizing risk
Another reason business analytics is so important, especially when creating business plans, is the ability to analyze operational processes and the risks associated with them. Many businesses flounder a bit when they create their business plan when it comes to creating an effective set of business practices. As a result, they are often surprised when they open for business and find productivity dropping. This is why the goal should be to create as detailed a business plan as possible, including the minutiae associated with daily operations.
But how can business analytics help with streamlining a business? As always, the answer is ‘data’. Analyzing data about a business, its goals, and even how competitors do things can help with understanding why certain processes are a good idea, or, on the contrary, why they would likely impede productivity and negatively impact the business.
More specifically, predictive modeling data helps businesses strategize about their futures. What else is a business plan if not one large strategy for future growth? Analyzing data and using it to generate a predictive model allows businesses to see into the future, so to speak, without leaving the present. Business analytics can help them predict how their business might look in the future, making creating the business plan not only a bit easier, but much more accurate.