Because the February-March session sold out, I have been invited to reprise my three-part workshop “Become Your Own Boss: Effective Business Plan Writing” at Boston Center for Adult Education 122 Arlington Street Boston MA on three Mondays, May 9, 16 & 23 from 5:30 PM – 7:30 PM. For more information or to register please visit http://bit.ly/becomeyourown59 or call 617.267.4430.
As Freelance consultants, we know that information is nearly as valuable to us as our skill set. Information leads us to make smart decisions about all aspects of business: what services to offer, identifying target client groups, determining a profitable business model, understanding how to market our services, gaining a competitive edge. That good information is integral to all that we do comes as no surprise, but until now there was no scientific evidence to support that belief.
New research done by Erik Brynjolfsson, economist at the Massachusetts Institute of Technology Sloan School of Business, Heekyung Kim, graduate student in economics at MIT Sloan School and Lorin Hitt, economist at the University of Pennsylvania Wharton School of Business proves that good information really does put money in your pocket.
The three studied 179 large businesses and found that when decisions enacted were based on reliable data, companies achieved a 5+ % higher productivity level than businesses that relied more on “experience and intuition” for decision making. The higher productivity could not be attributed to other factors, such as the use of more sophisticated technology.
In the study, data driven decision making was not primarily based on merely collecting data, but was closely linked to how the data was utilized. In the April 24, 2011 New York Times, Mr. Brynolfsson stated that business decisions based on data and analysis “have huge implications for competitiveness and growth”.
Thomas Davenport, professor of information technology and management at Babson College in Massachusetts supported the conclusions reached regarding data driven business decisions in a book written with Jeanne Harris and Robert Morison, “Analytics at Work: Smarter Results” (2010), concluding that companies that rely heavily on data analysis are likely to outperform those that do not.
The big question is, which data do we choose to collect and analyze and how do we best apply it? Curating data is big business. “The biggest change facing corporations is the explosion of data”, said David Grossman, technology analyst at Stifel Nicolaus in the April 24 NY Times. “The best business is in helping customers analyze and manage all that data”.
How does a Freelancer decide what to do with data available to us? I propose that data presented here would guide readers with excellent proficiency in mathematics and possessed of an advanced degree in the subject to become data analysts! All others might take a look at our P & L statements and examine gross revenue and fixed and variable expenses and analyze how much it costs to generate income and what can be trimmed to make the bottom line better.
Speaking of revenue, do some research on the services that your target clients are contracting for these days. Are you retaining clients and signing new ones, too? How does your 2Q 2011 active client roster compare to 2Q 2010? Do you need to tweak your business model to maintain your competitive edge, or might it be wiser to seek a strategic partnership?
To help figure things out, do a free online search of Google’s Key Word Tool or Wonder Wheel and type in a descriptive phrase of your core service. How many prospects in your locale are searching for what you sell? Next, type in a phrase that describes the service you think might interest clients and see how many local searches it gets. There you have it, data driven analysis to guide your business decisions.
Use Google Analytics to track hits to your website and report which pages receive the most attention. You can correlate that data to the number of follow-up requests you receive and the conversion of that follow-up to new business. Make further use of that data to evaluate the efficacy of your website and learn how you can enhance this important marketing tool. Will adding multimedia to your website be useful? Or will adding pages to give more information do the trick? Or maybe you should just simplify the text and clarify and strengthen your message? Listen to the data and find your answers.
Thanks for reading,