Business Analysis is a broad topic when it comes to digital marketing, but it is tremendously important when it is applied to the way your business operates. Put simply, the goal of business analysis is to identify business needs and determine solutions to problems.
This is similar to the way that web analytics quantifies what’s working and not working for your inbound digital marketing. The difference is that while web analytics provides you the empirical data of what’s happened, applying business analysis techniques can provide trajectory for the next steps your business needs to take in order to grow in the future.
Another goal of business analysis is to make your business more intelligent and efficient. In doing so, you can increase the value of your business, meet your goals faster, and find a greater return on your investment.
Here are five ways that business analysis does just that.
1. Reduce Re-Work – You Don’t Have Time to Do Things Twice!
Growing your business isn’t always going to coincide with your business plan. It’s normal to expect changes, as each step in your plan will be a learning process. When you begin to make changes and add on to your business plan, you have to be careful not to create more “re-work” on things that you know are working well. Focusing on what is working and documenting it will reduce duplication in that process.
Example: Let’s pretend you are running a business that delivers groceries from the stores to residences. In the past few months you’ve received some complaints that there are missing items that your customer purchased, but not did receive. To address this problem, you set up a strict quality assurance process to make sure that every order is triple reviewed before it goes out on delivery.
As a result, your customers are receiving complete orders but delivery time has noticeably increased. This solution is working, but it’s costing you more time and money and reducing a part of the quality of service you want to offer. By examining what was working before you started a strict review, and what part of the quality assurance process is most effective, you can eliminate the unnecessary parts of the process and increase the quality and effectiveness of your deliveries.
2. Cut Your Spending on Things That Just Aren’t Working, Move the Money to Things That Are.
As you look under the hood of your business, some of the performance diagnostics may surprise you. This could happen when you are reviewing the web analytics of your inbound marketing, e-commerce sales, or number of leads you want to generate. Some solutions could be performing better than you had planned, and others may be falling flat. Evaluating your processes and data could open new ideas that you might not have anticipated being a working solution. Dedicating the time to explore new ideas and mercilessly letting go of ones that aren’t working can provide your business with fresh, cost effective solutions.
"Dedicating the time to explore new ideas and mercilessly letting go of ones that aren’t working can provide your business with fresh, cost effective solutions."
Example: For this example, let’s pretend you have an online health supplements business. After reviewing your web analytics and quarterly finances, you discover that your customers aren’t ordering any of the digestive supplements you offer. The distribution license to sell them is very costly, and isn’t providing any return on your investment. While this particular supplement has been a part of your business and marketing plan, you decide to stop selling it and instead redirect your marketing efforts to supplements that your customers are buying. This results in more new customers buying your popular supplements, and a reduction in overhead since you no longer pay for an expensive distribution license.
3. Eat the Elephant One Bite at a Time - Prioritization Reinforces Your Focus on Value.
As a small business owner, it’s important to stay focused on overall business growth during the pivotal startup period. However, becoming too focused on the bigger picture can create reluctance to take the time to prioritize what’s important in each facet of the business. Allowing your business the time to prioritize projects and solutions will reinforce the value of each project that you implement. This is much easier said than done, but is that much more important in that prioritization can be easily overlooked, prolonging the time it takes to complete each step of your plan. Focusing on priorities reinforces and increases the efficiency of your business.
Example: Let’s use the online health supplements business again for this example. In addition to selling your supplements from your online store, you have had plans to set up relationships with local grocery stores to carry your products. You’ve already spent a great deal of time and money working with one grocery store that has been on the fence for months, which has cut into time and money you could’ve spent reinforcing your online store. You make the tough decision to stop pursuing this relationship for now and instead make e-commerce your number one priority. As a result, your revenue increases and overhead decreases because of your focus on one priority at a time.
4. Find Your Weak Spots, Even If It Means a Change to Your Business Plan.
Having a business analyst on staff can be immensely helpful because they can dedicate their time to finding solutions and business needs that you may not have thought of when developing your initial business plan. However, not every small or micro business has that luxury. While it may seem counter-intuitive to deviate from the business plan, spending the time to mine for potential business needs can actually save you time and money in the long run.
This can be accomplished by using business analysis methods such as a SWOT Analysis, needs assessment, or summative/formative evaluation. Allowing yourself and your team to regularly seek out business needs and weaknesses can vastly improve the value of your business.
Example: Let’s use our delivery service example again to connect the dots. After reviewing your finances and monthly orders, you discover that the majority of your clients make orders during the weekday rather than over the weekend. This gives you the idea that offering to pick up lunch or fast food in addition to grocery orders could be attractive to your primary demographic. You then direct some marketing efforts to advertising this new service addition. As a result of you trying out this new idea, your order volume increases as well as acquiring brand new customers.
5. Training Your Replacements: Don’t Keep Your Business in Your Head!
The number one thing you want your business to do is grow. When your business grows, so does your management team, employees, projects, and overhead. The natural flow of communication that was working for your smaller team (often just you, the business owner!) has the propensity to break down as the number of team members increases.
The key to solving this problem is to document all of the workflows and processes that have been successful as well as those that have NOT. Understanding what works and what doesn’t will allow you to scale, which allows your business to grow more seamlessly and with fewer speed bumps.
Example: We’ll use the grocery delivery service in our last example. Your service has become so popular that you’ve been forced to hire more employees while demand for your service has grown outside of your usual radius. You’ve also hired someone to manage your employees. After a few months of orders, you begin hearing complaints from customers about incomplete orders again. Recalling how you solved this problem originally, you document the entire process on paper the way that it was working with your smaller team. As a result, you find some gaps in the process that your manager wasn’t fulfilling in the quality assurance process (It’s common that a new manager doesn’t instinctively know everything that you know because they haven’t experienced the growing pains that you have). This allows you to create a scalable workflow that allows your manager to communicate more effectively with your drivers and reduces the propensity for future problems.
Making it All Work
Applying business analysis techniques can seem quite daunting and time-consuming, but it doesn’t have to be. Sharing the documentation and analysis responsibilities with your team is a great start, which allows you more of the time to focus on running the business. Eventually, you may want to consider hiring a business analysis consultant to offer their expertise and skills to help optimize your business efficiency. Ultimately you want to see a higher return on your investment in your business, and taking the time to analyze can help you achieve just that.
Need help with business analysis for your small- or medium-sized business? Contact us today to learn more.