Did you know that 59% of businesses now use analytics in some form or another?

In Deloitte’s The Analytics Advantage report, almost half of the respondents (49%) asserted that the biggest benefit derived from analytics is the ability to make better decisions. Nearly two-thirds commented on the importance of analytics in driving business strategy.

In light of all this, it is clear to see that analytics is a very key aspect of business today and that understanding it is in the best interests of your small business.

However, before we look at the numerous advantages of business analytics, let us take time to first define the word itself. 

What is data analytics?

According to Investopedia.com, data analytics can be explained as,

“…the science of analyzing raw data in order to make conclusions about that information.”

From this definition two things emerge:

Firstly, analytics involves methodical in-depth review and examination of collected information. And secondly, the end goal of this analysis is the explanation and interpretation of that same information.

Now that we understand what analytics is and what’s involved, let us consider the benefits it brings small businesses.

Benefit #1 Make strategic informed decisions

Is it a sound move to enter a particular market, sell a certain product or offer a new service? Making decisions in business with no clear metrics is a recipe for disaster.

How important is analytics in decision-making? Deloitte asked over 35 senior executives in companies across North America, Asia, and the United Kingdom, and here are the results:

Analytics is the foundation upon which sound decisions can be made.

It’s not just for decision-making purposes that analytics are being employed, however.  

A MicroStrategy study shows that 60% of companies are using analytics to boost process and cost efficiency, 57% to drive strategy and change, and 52% to monitor and improve their financial performance. 

And speaking of finances...

Benefit #2 Increased revenue and lower OPEX costs

There is a financial payoff that happens when you invest in a solid business analysis strategy.

According to McKinsey, investing in analytics can net companies an average 6% increase in their profits.

To add to this research, another study by BARC shows that companies that make strategic use of analytics can realize operational expenses (OPEX) cost reductions of up to 10%.

Benefit #3 Better operational efficiency

Every business, large or small, can benefit from smoother business operations. Inefficient processes are costly.

For example, waiting until a machine breaks down to repair it instead of having scheduled maintenance will more often than not lead to out-of-pocket, out-of-budget payments.

Predictive analytics can be used to anticipate maintenance in order to avoid these spontaneous expenses.  

Conclusion

It’s clear to see that the uses of analytics are vast. In this post, we’ve seen that analytics is being used to drive change and strategy within organizations, improve operational efficiency and mitigate costs.

Small business owners cannot afford to be ignorant about this modern-day best practice. And with so many resources at your disposal, there can be no excuses. For example, you can take advantage of Google’s Analytics Academy to learn analytics for free.

Another great platform that offers analytics courses is Coursera.org where you can take an assortment of courses including beginner classes from renowned institutions such as the University of Pennsylvania to executive level classes if you’re more advanced.