by Ben Wilson

Clarity Creates Confidence

Uncertainty and risk have defined the Australian business environment in recent financial years. From business disruption caused by COVID and its related regulations, to the rising cost of capital and funding, profit margins within small businesses are becoming increasingly strained.

While there are no magic bullets or crystal balls in business, there are tools and strategies that directors and managers can employ to minimise the uncertainty in their decision-making processes.

MicroStrategy, one of the world’s leading business intelligence companies commissioned a survey of global businesses, with 56% of participants responding that the implementation of data analytics within their business led to “faster, more effective and precise decision making”. On top of this 64% of respondents identified that changes caused by their review of data led to improved efficiency and productivity.

Big Data – Small Business

In businesses across Australia, large or small, thousands of points of information are generated every day. Businesses that understand and leverage this information position themselves to make more informed decisions to assist in achieving operational and financial goals.

The successful use of data in business decision making has been a growing trend across many industries since the early 2000s. However, across this time, the cost and time required to collect, maintain and process this data were prohibitive to most small businesses. In 2021, only 45% of small businesses employed data analytics in a structured form. Small businesses are exposed to a highly competitive and dynamic market, where shifts in upstream and downstream supply chains impact the underlying profitability and competitive advantages with increased effect.

The Opportunity

Advancements in technology and the proliferation of education have brought about data solutions to capture more of the available information, while fitting the tight budgets of a small business. These solutions can provide actionable insights for business owners, allowing them to better understand their markets, clients, operations and daily trends.

Benefits to businesses that employ data in their management processes can include:

• Refinement of surplus business expenses – analysis of the data around your businesses purchasing, marketing spending, or ongoing system costs allows management to identify and monitor the most cost-effective applications of your resources towards business success.
• Process efficiencies – data assists us in uncovering the actions we can take to make actions in the business more effective for their time. This can range from production to customer service, to administration or inventory management. Focussing on the real numbers behind these processes helps to understand what works, and where processes need improvement.
• Improvement in the understanding of your business’s risks – understanding and identifying the points of uncertainty around a business help to uncover any negative trends quickly and effectively. This allows management to make adaptive decisions and pivot the business for continued success.

Case Study: NDIS Equipment Provider

A husband-and-wife partnership run a small specialist NDIS equipment provider in rural Victoria with big goals. They are very involved in their local community and had goals to develop property and community services within the medium-term future.

Their business has gone through a period of unplanned growth, and they were uncertain about their ability to maintain this trajectory to meet their other goals.

They engaged Ben in 2019 to develop a strategy to harness the data in their business and implement an ongoing monitoring and response program. At that time the business had net profits of $300,000.

The strategy involved a data driven forecast based on high detail transactional information from their point-of-sale system showing the capabilities of the business in its most efficient form. On top of this we built a Key Performance Indicator dashboard, which directors were able to monitor on a weekly basis to ensure their operational levers were being attended to appropriately.

Over the period, monthly board of advice meetings were able to address any immediate concerns from prior periods, highlight risks in management and address any personnel or performance gaps.

Through being more attentive and connected to the data in their business, they were able to achieve a net profit in the 2022 Financial year of over $1 million.

This growth in the business helped build a strong case to take the company to market. After a short period, the company was acquired by one of the major regional NDIS providers for a substantial amount due to their increased net profits. The husband and wife have since been able to apply this wealth towards their property and community development goals.

How We Can Help

At Lambourne Partners, the team has a range of data management and analytics solutions to help provide clarity and certainty to your small business.

We provide a range of services to assist small business clients, including implementation of new systems to improve collection of the information your business generates, the construction of analytical tools and processes to help your management team make their decisions with clarity, all the way to board of advice supervision where you will receive regular analysis and reporting tailored to your business with the aim of refining the efficiencies in your business to help reach your goals.

To discuss these services, please get in touch with our team below or call (02) 4969 6600.