PMBA graduate student
University of Guam
Editor’s note: Kourtney Eay is a graduate student in the University of Guam’s Professional Master in Business Administration program. The students were assigned to write a column of business relevance for possible publication in Guam Business Magazine. GB selected Eay’s piece to publish as it presents a timely, relevant and actionable topic for businesses and makes a well-supported argument with a clear opinion.
With the rise in competition, business owners and upper management need to make timely informed decisions that can have a lasting impact on the business. What information is there to rely on, and how is it obtained? The answer is: statistical data through simple means of collection.
Data is statistical information collected from business activities. It can be quantitative providing computational information, such as how many customers or how much revenue is generated a day. Data can also be qualitative providing characteristic and descriptive information, such as popular selling items or what type of market segment the business is capturing.
The statistical data collected enables decision makers to view the effectiveness of their strategies implemented in their operations through a lens and provides a way to dig down, focus on certain areas and see the true effects from changes in daily operations, such as revenue trends, customer movements, captured market segment, etc.
The type and depth of data collected varies as to what the business owners and upper management want to analyze, which can vary from industry to industry. This does not only apply to large businesses, but small businesses may also want to consider collecting data to better understand how their operations are doing besides looking at net profit or loss.
For example, a small restaurant situated in Tamuning planned for its primary market segment to be tourists and decided to specialize in breakfast dishes and local cuisine. After months of operating, the restaurant did not have its desired customers, which resulted in excess food waste due to over-anticipated breakfast orders. However, if the restaurant had collected information beforehand, such as what type of customers they have been receiving and frequent orders, they could alter their marketing tactics to attract their frequent customers and minimize food waste by preparing for the day based on actual trends.
After collecting data over a period of time and building up a decent base, the restaurant can then begin to forecast for seasonality, look for potential growth and analyze if new marketing tactics are working.
However, if unreliable data is collected, the analysis results will be inaccurate and not beneficial to decision makers. In a small business, information logged on spreadsheets or based on observations may suffice in the beginning, but there is always room for human error, data corruption and misinterpretation. The larger a business grows, the use of a point-of-sale system, management software or accounting software becomes a better choice to collect data.
Software enables data to be collected in real time and generates reports based on the information inputted in the system, which are utilized for analysis. For example, a POS system can collect information on what types of customers — local, military or tourists — are making purchases, how much revenue was earned for the day, etc., while a management system or accounting software can be utilized to monitor inventory replenishment, daily expense, etc. Information that needs to be hard keyed is always at risk for human error. However, having preprogramed selective inputs and controls through checks and balances, such as reviews and separation of duties, helps reduce and minimize the collection of unreliable data.
Having reliable and timely information is essential for business owners and upper management to make decisions. The data can be qualitative or quantitative, but the necessary data needed will vary from industry to industry. Utilizing software to collect data is ideal for growing businesses when proper controls are in place to ensure data integrity.
The overall take-away message is that reliable and timely data provides decision makers with in-depth information to make timely and relevant decisions.