Go By Your Gut But Validate With Facts And Figures

"Trust, but verify"

This is a quote from Horatio Caine (played by David Caruso) in the popular CBS series CSI Miami. It was also the signature phrase of President Ronald Reagan when discussing relations with the Soviet Union. As SMB owners, many of you tend to rely on gut feelings to make some important decisions. A less charitable way of looking at it is that you are making those decisions based on emotional feelings such as ego, insecurity, fear and greed. Some of those decisions can make or break a small business such as yours. It is prudent to challenge those decisions by collecting more data and doing objective analysis.

Decisions, decisions

Let us take an example. If you need to make decisions about where and how to spend your scarce advertising dollars, you know it is a huge gamble. However, especially if you are doing business online, you are already collecting a ton of data - the number of visitors to your site, the number that converted to leads and the number that actually bought something and so on. In addition, you also have access to demographic and other data - income, age, geographical data - freely downloadable from the government web sites. You need to be able to analyze your data, cross referencing it with the demographic data, to get actionable insight into who is your target market and where it makes most sense to put those bets. In short you need -- drum roll please -- business intelligence!

From the boardroom to the home office

Yes, it is true that business intelligence (BI), also known as analytics, used to be expensive and time consuming. It used to be a fancy phrase meant for boardrooms of large corporations. However, it is as important for smaller businesses as it is for larger enterprises. In fact, considering that smaller businesses have much less financial resources at their disposal and do not have any resilience to recover from bad decisions, BI becomes all the more critical for them. Nowadays, PCs and servers have become a lot more powerful to do the heavy number crunching needed. And thanks to free open source BI software, these reports and analysis can be done at a cost that is affordable to small businesses. According to a recent report by Gartner on open-source business intelligence software its adoption is doubling every year because the products are viewed as "good enough" for routine applications.

Intuition is valuable, enrich it with data

To sum it up, it doesn't mean that you small business owners should abandon the value provided by the gut feelings and intuition that you bring to your decision-making every day. It simply means that you are going to have to start validating it with more data and analysis that only the right technology can make available.