Keep it Simple

When diving into the data for a small business, I am often confronted with a frustratingly simple question: “Where do I start?” With tens of thousands of data points, hundreds of variables, and dozens of tools to analyze them, it can be a bit overwhelming to decide where to begin focusing your efforts. This question is not best answered by thinking through the strategies available to you, but rather by considering the real world impact of the data you are looking at.

Over the years, I have developed a practice of beginning my analysis not by diving into the data, but by visualizing myself as the owner of the business, and as a customer for the business. This practice creates an intuitive understanding of what matters to each party. With this intuition, I prepare to dive into the data and use it to answer a simple question: What is working?

At the end of the day, my goal is not to uncover some hidden secret in the data that will lead to a new strategy to completely revolutionize the business. If that were my goal and I possessed the skillset necessary to execute, I would be starting multimillion dollar companies instead of helping other people improve theirs. Rather, my goal is to discover, quantify, articulate, and visualize which already implemented strategies are working and which aren’t working at all.

Recently, I did analysis on thousands of invoices for a landscaping company. At first, I fell into the familiar trap of making things too complex in order to demonstrate my value to the client. I considered how I could use k-means clustering analysis to provide the client with better information with which to execute marketing campaigns. I considered using regression to predict future revenue, or provide better insights into seasonal sales with time-series analysis. Although it’s fun to sound impressive, none of this would have been useful to the client. Upon considering the question: “What’s working?” the optimal strategy became apparent. I didn’t need to use every strategy at my disposal, I just needed to find out what was making my client the most money. Using this strategy, I conducted a simple analysis of revenue by leads source, and recommended a strategy which made the client tens of thousands of dollars with no cost to himself.

In summary, when it comes to data analysis in business, keep it simple: find what’s working, and do more of that.