SMEs: Leveraging On Data To Increase Profits

5 mins read

Fatihah Ramzi, DigitalCFO Asia | 13 December 2022

Koren Wines, Asia Managing Director for Global Small Business Platform Xero.

Many small and medium-sized businesses have yet to comprehensively employ data analytics within their organizations, but they can begin with small steps by adapting what’s already in place. Data analysis offers a wealth of options for improving business decisions of all kinds, strategy, production, operations, and marketing. Unfortunately, it’s the very companies that are slow to adopt technology that may benefit the most.  

To understand more about leveraging on data to grow one’s business, DigitalCFO Asia spoke with Koren Wines, Asia Managing Director for Global Small Business Platform Xero, on how SMEs can unlock the full potential of their data to obtain data-driven wisdom to better guide business outcomes 

Reasons Why Organizations Are Being Held Back From Wanting To Use Their Data Successfully

It is not about want. It’s about all kinds of other things that are going on for small businesses. Small businesses are run incredibly lean, and they spend all their time running the business. Many small businesses know that they need to do things differently and that they need to digitize. They also know that they don’t have all the information at their fingertips as they are so busy running their business that they just don’t have time to put the energy into working out how to get data automated and seamlessly integrated so it’s delivering insights for them. 

When you start a business, you don’t know what you don’t know. Koren Wines shares that she actually comes from a business background and has owned her own business. One of the businesses she owned was a restaurant and when she started that business, she claims that she was not at all digitally digitally savvy. She didn’t understand how apps work together and software came together to deliver insights. 

She started that business because her husband had a hospitality background and was super excited to start his own restaurant. However, they soon started to realize that you know all the processes they had in place were not bringing out valuable insights. They did have accounting software and an electronic point of sale system, but those did not integrate. They were aware that they weren’t getting the insights that they needed out of their processes in order to make the decisions that they needed to make. 

But the problem was, you start a business and you’re running at a rate of knots – as mentioned before, small businesses are lean, so they do not have the time to stop and implement systems on their own.  For small business owners, the priority is to keep their business going. 

“So, I don’t think it’s about a want. We knew that there were there was amazing opportunity to digitise and optimize and you know and become more efficient. But we just didn’t have the people the time or you know, or the knowledge to be able to do it,” says Koren Wines, Asia Managing Director for Global Small Business Platform Xero.  

Impact on SMEs in the Financial Services Sector

Industry 4.0 refers to the adoption of new information technologies that allow massive amounts of data to be digitally collected, analyzed, and exploited in businesses to make better decisions. As a result, determining how businesses may use data components to improve their performance has emerged as an important research topic. This issue is becoming increasingly important for SMEs. 

It has been discovered that data adoption can have an impact on both operational and economic performance. Because of shifting client expectations and greater competition from Fintech competitors, the financial services sector simply cannot afford to leave data unexploited. Instead, SMEs should maximize consumer understanding and establish a competitive advantage by leveraging existing (and new) data sets. Several industry participants are already utilizing data analytics approaches to create compelling use cases, but many organizations are still lagging behind due to their preference for more short-term solutions. 

Case Studies Whereby Organizations Were Able To Increase Their Profits Simply From Leveraging On Data

  1. Panamericana 

F&B was hit hard during the pandemic, forcing healthy and bakery Panamerica to pivot to online delivery. It also became increasingly important for them to allocate and manage costs more efficiently. Panamericana reconciles transactions easily with the adoption of software that provides real-time bank feeds and reconciliation, allowing the business to do away with previously laborious manual processes, such as painstakingly updating Excel sheets. 

At the same time, stakeholders can access live data online via a smartphone, and generate financial reports quickly. This helps the restaurant allocate and manage costs more efficiently and allows companies to compete better in an economic environment that is constantly changing in response to evolving technology. 

  1. SGfitfam 

Fitness studio and wellness consultancy, SGfitfam, has saved an estimated 10 man-hours weekly on tracking and reporting financial data which has allowed them to focus on client wellness and developing new offerings. The “budget manager” tool was a particularly useful tool, to keep track of expenses and in setting up monthly budgets. The cloud-based accounting platform also allowed the team the visibility of monthly revenue goals and ensured that their finances stayed on track.  

Recommendations On Getting Started In Using Data to Make Informed Decisions

First and foremost, get help, business owners should find someone who knows their business inside out. Usually, the people that know the business better than the business owners are the accountants. This is because they know the financials of the business, and this is an amazing opportunity for accountants to move from just giving financial data to the business to speaking about those insights. 

Once a business’ data is moving, that’s when businesses owners want the help as they want to be able to make decisions about their business. Business owners simply want to be able to make decisions about their business, have the data interconnected, flowing seamlessly between the apps and then to be able to extract that to give them visibility. This visibility will allow businesses to understand whether they could make decisions in recruiting more people, whether they should grow, whether they should purchase equipment or whether they could expand into new markets. 

“Those are really critical decision-making things, and it is so lonely and isolating, you know, being in a business on your own, you feel like if you don’t have the data, you feel like you’re making decisions in a vacuum, and so you just need somebody to come and help you to get the data all lined up,” says Koren Wines, Asia Managing Director for Global Small Business Platform Xero. 

With that new visibility to be able to analyse and assess data to then give insights into the direction that businesses should go, getting help from an experienced accountant, is the very first businesses must do to get started on using data to make informed decisions. 

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