Most business owners have a reasonable grasp on financial results, but what is necessary for agility is a meaningful understanding of key drivers behind the numbers.
Isolating those drivers and using the data to reform and grow the business is now more critical than ever as businesses re-establish themselves post Covid-19.
Many difficult decisions have already been made by Victorian businesses and as the economy gradually reopens, more tough calls are looming.
Every decision made needs to be fact-based – successful organisations will not leave decisions to chance.
Data should influence every facet of the business, ranging from which product lines to stock and how much, to more confronting questions such as, what days and what times do I open? With so few customers permitted through the door, do I even open at all?
Navigating these turbulent times requires deep analysis of data to support intuition, recognise exactly where deficiencies are, then turn those insights into actions.
What’s needed just to open the doors?
Despite the easing of restrictions across Victoria, many business owners are uncertain about whether their organisations can yet operate profitably.
While some could easily estimate the impact of the new opening rules on revenue and costs, others require an in-depth break-even analysis to ascertain their projected profitability.
This assessment is based on assumptions and information extracted from the collection and standardisation of data assets, allowing an analysis to be factual.
We conducted such an assessment for a large hospitality client, which had complex and variable revenue and cost structures. Revenue data was collected from its physical, online and partner channels, whilst cost data came from payroll, rent, utilities and its food and beverage system.
*Note: For the purpose of this article, some visuals in this dashboard have been simplified and values modified to de-identify our client. This dashboard is for illustration purpose only.
The analysis estimated the average number of customers required for them to be profitable, combining analysis of datasets such as ticketing, rostering, utilities, sales, and weather.
Our team automated the collation of these datasets into a centralised repository and developed a near real-time business intelligence dashboard that enabled the client to project revenue and profitability.
Armed with this tool, our client was able to confirm their intuition and develop a data-driven strategy based on the detailed financials underpinning their operations to determine when it was appropriate to relaunch.
Margin analytics and rapid response to change
Covid-19 has not only impacted the hospitality industry. The organisations that supply products to these businesses have also had to make significant adjustments and have required deeper insights to make informed changes.
Most could no longer rely solely on their existing knowledge and expertise.
Earlier this year, we were engaged by a fast-moving consumer goods client that supplies its products to hundreds of customers across Australia to develop a margin analytics engine.
Leveraging its rich sales transactional data, our team developed a margin analytics engine capable of identifying automatically, and in near real time, the key events causing shifts in sales volumes and margins.
During the pandemic, this tool proved extremely beneficial in that it enabled the client to quickly identify the most significant items at risk in its portfolio and, when possible, to take factual decisions and actions.
Without it, the business would have been significantly slower to perform the analysis and respond.
Where many companies were left to improvise strategies, our client took data-driven decisions that helped limit losses and maximise new opportunities.
Today our client is also better placed than its competitors, as it will be able to spot and act on changes resulting from the easing of the restrictions quicker.
There are going to be some key decisions that owners of establishments need to make in coming weeks, will these owners use their gut and initiation to answer these questions and navigate through these difficult times or will they adopt a more fact-based data driven approach?