By Paula Jensen

Intuitive decision making is based on gut feelings, past experiences, and personal judgment. It involves using our instincts and emotions to decide, without relying heavily on data and analysis.

Data-driven decision making is based on objective data and analysis. It involves collecting and analyzing relevant data to identify patterns, trends, and insights, which are then used to make informed decisions.

Let me share a small-town leadership story.

About three years ago, I was in a board meeting with an economic development organization discussing their need to attract workforce for about 90 local job openings. The economic development director shared a couple recent stories about how limited housing stock was a big barrier for attracting more workforce. After a short discussion, one of the board members stated firmly, “I’m a realtor. We do NOT have a housing problem! There are currently twelve homes for sale and multiple apartment vacancies.” At that point, the conversation stopped.

Both people were accurate in their reports, yet in hindsight what was missing from the conversation was some quality secondary data available from their local housing study. The Housing Study, completed by a third-party, stated:

“The community has a stock of older, lower valued homes, of which 59% need minor or major repairs and another 3% are dilapidated. Our analysis of sales activity indicates that approximately 50% of the homes are valued less than $75,750. As some lower valued homes come up for sale, they may not be attractive options for potential home buyers because of the amount of repair work that is required.” In addition, the housing study recommended, “approximately 10 to 15 additional rental units will be needed over the next five years to replace lost units. This replacement is appropriate due to the deteriorating condition of older, substandard rental housing that should be removed from the occupied stock.”

Data can open conversation to new possibilities

In the story above, the economic development director’s intuition was indicating that housing was a strong barrier to workforce attraction. But imagine if that intuition had been backed up with the data from the housing study? That data could have opened the conversation about quality housing being the issue, not the number available units.

I am happy to report, three years after this initial conversation the economic development organization is using intuition (knowing their community) and data (their updated housing study) to move toward solutions that will ultimately address the housing quality issue and attract workforce.

Combining the two approaches of intuitive and data-driven decision making can be very powerful. Intuition can provide a valuable starting point, helping decision makers to identify potential options and narrow down choices. Data analysis can then be used to validate and support these options, providing objective evidence to back up intuitive decisions.

By uncovering the story told by the data, it can also help us see patterns, understand the meaning behind the data, and become more proactive rather than being reactionary to issues as they pop up.

Ultimately, the best approach will depend on the specific situation and the decision being made. In some cases, intuition may be more important, while in others, data may be the key factor. The most effective decision makers can balance both approaches, using intuition to guide them, and data to validate and support their decisions.

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Photo (CC) Justin Grimes, on Flickr

Read anything offering marketing tips and you will be encouraged to learn who your customers are. You want to understand the demographic make-up as well as their likes and dislikes and, of course, what they buy.

Yet, so often that is the end of the effort.

Getting the data can be done with registration information, sales receipts, and even contest applications. You can also ask simple questions, “how can I help you?” or “did you find what you wanted?” It may also come from asking what they like about shopping in your store. And then there are short surveys, a comment box, online engagement polls, etc.

So getting the data is not usually the problem.

Yet, how often do we take the time to dig into the data and look for clues to help us run our business. Do you analyze what it means and then make changes on what you found. And do you remember to thank the customer and tell them what has been done because of their help. (I must take a moment of self-confession. I don’t do any of this as much as I should. Time to up my game.)

In my case, doing this blog allows a number of data points to be collected. One such effort is just looking at the number of people who engage with a blog post.

So I decided to look back on my 2016 blog posts for Small Business Survival. For this first effort, I simply wanted to find my top two posts based on the number of people who commented on them. Engagement could have also been likes but I felt people who commented where especially interested in the topic.

The results were:

1. Your Small Business Needs a Sign – https://smallbizsurvival.com/2016/07/your-small-business-needs-a-sign.html
2. Information Helps Your Small Business Succeed – https://smallbizsurvival.com/2016/06/information-helps-your-small-business-startup-succeed.html

This simple look at the data reinforces survey information that I first gathered in 1996 and at several other points in time. At a broad-brush level, marketing and startup information seem to be of greater interest.

If you look at the second article though, maybe the issue is more of a time management question. It’s important to go deeper than what a quick overview might suggest. This might be a time where additional information is needed – Is it time management that is the issue or do you have some specific startup questions or is it both?

Bottom line, data can move your business forward if (1) you take the time to analyze it; and (2) you act on what you heard.

Thanks for your blog comments, likes, and interactions. They help us focus on what you need. Keep them coming.

Photo (CC) Justin Grimes, on Flickr

A lot has been written about how market research will help you achieve business success, and many of these claims are true.

That connection, however, is not a simple, direct link. Collecting information about your potential market is useful only if you take the next step of analyzing the data.

Data analysis yields clues about who your customers are, what they are buying and problems they face. It provides you with an insight of the benefits they are seeking.

Data analysis begins before you even start collecting the information. Thinking about the questions you want answered. This guides the data you need to collect. Remember to start with data you already may have:

• Customer lists – Do the lists answer how much customers spend, when they buy and what they buy?
• Effectiveness of your marketing – Are your customers responding to your marketing and advertising efforts? If so, what efforts are working best?

Your local chamber of commerce or economic development office will also have information about the trade area and the people who live there.

You also can get information from third-party sources. Trade journals, news magazines and papers, plus writers you find online or in books, often share information about your target market.

Finally, vast amounts of data are available for free from the state and federal government. Here in North Dakota, you might check out ND Compass and the U.S. Census Bureau. Both of these are adding tools to make data analysis easier for anyone.

After having examine the information available, then look for the gaps. Make plans to fill those gaps.

Tools to help collect such information include surveys (paper, oral or electronic); contests structured to provide feedback information; checkout data, such as asking a question or two as a person is checking out; and customer feedback. Data also can come from observation, interviews or simple testing. Data collection can be done one-on-one, in a group or through the mail.

But to this point, your data is just numbers and words. The return for your effort comes from making sense of the information. You can use in-depth statistical packages or textual analysis software. Many business owners start by putting numbers into a spreadsheet and looking at frequencies, charts and graphs. The idea is to see if any trends emerge. The same goes for textual information.

Having others look at your initial findings is helpful. This is a good time to have your mentors and advisers review the information and have some frank conversations about what everyone is seeing. Different interpretations will emerge, giving you greater insight. If you can supplement the numbers with customer conversations, then your analysis will yield even more.

It sounds complicated, but it’s really not. Start simple and build your skills and your database. You don’t have to collect everything at once.

When doing market research, balance what you need with the cost and time required to get it. Don’t forget to take into account your customers’ perspective, how much time are they willing to give and what information might they want to keep private.

Building your business means knowing your customers. Good market research can help you know your customers, so start your effort today.

Photo (CC) Justin Grimes, on Flickr

Yet small-business owners often are not sure if and how big data fits into their business. Nor do they know where to get it and how to analyze it, even if they would have it.

Small-business owners need not be scared of the term “big data.” It simply means information of a size that you cannot analyze it by hand. You need to use some type of computerized tool to help out.

But business owners need to remember that data is one key when making decisions.

This is the point at which business owners get nervous. They don’t want to spend a lot of money or hire someone to help them get this done. But they need to stop and think about the realities of the situation.

The first reality is they probably already have the data in the form of sales receipts, inventory, purchasing information and the overall financial records of the business. All of this probably already is stored electronically. Second, they already are “mining” the data when they do their profit and loss statement, cash flow reports, balance sheets, and year-end taxes and reports.

However, business owners have much more they can do with their existing data, just as other data is available for them to tap into or that they could gather relatively easily. The Census Bureau offers huge amounts of data on the demographics of an area. And the Census Bureau even put a tool, American Fact Finder, online to help with the analysis.

Other tools also are available to use in analyzing data, starting with one many people are familiar with already: the spreadsheet program.

In addition to the census data, many specialized databases are available, and they often have their own analysis tools or reports that already have been created and you just need to decide what you want. In North Dakota, one such tool is North Dakota Compass, at ndcompass.org.

Want more data? Then check out the U.S. Small Business Administration. Search for data resources. Or visit your local library or your banker. They can help you obtain information such as key ratios for others in your industry.

And, finally, you can, and should, gather your own data. That includes information you should know, such as where customers come from, what they buy, what they want, how they rate your company, what they mean in terms of dollars spent and how they found your business.

Yet data and data mining also require a cautionary note. Businesses owners may wish to avoid that data-driven approach at certain times. One example is if costs of data mining are too high. A second is when time is too short for you to use the data to reach a decision. Another time might be when you already have made the decision and you aren’t changing your mind, no matter what the data say.

Finally, you must understand that one data point or one metric (measure of a business or organization’s activities and performance) does not portray the entire picture. Your company has a mission based on a vision. Those elements offer you a guide, and you must remain true to that goal.

Data can be a great thing. You probably already have it, along with some analysis tools. And more of both are available at no or low cost.

Remember, though, that data does not, nor should it, answer all the questions. Listen to your internal compass and let data simply be a part of the guide.