The road to sustainable business growth is paved with good incremental decisions. It is rare for a business to have all the resources needed to make all the improvements they want at one time. Many improvements require substantial financial investments in equipment or infrastructure, making tiny steps more affordable than giant leaps. The key is choosing steps that are both sustainable and provide greater returns on investment, accelerating the path toward future growth.
Experience and knowledge within your field or industry are certainly important factors in the decision-making process. That said, relying solely on intuition for matters such as equipment financing might not maximize your results. Data-informed decision making, on the other hand, can provide greater reassurance and persuasive power in moving actions forward.
What is Data-informed Decision Making?
Data-informed decision making is the process of using data analytics in business decisions. Raw information relevant to your business goals is collected and organized. Trends and highlights in the processed data are evaluated to provide evidence that supports or rejects specific options.
Significant data-informed decision-making benefits include a reduction of bias in the decision-making process and an ability to update data continuously as trends and needs change. Not every decision may have quantifiable data you can analyze, but you can gather the latest information for those that do.
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Building a Data-driven Process
Gathering raw data and getting it into a format where it can best inform your company’s decisions will take some initial work. But once a system is in place, it can prove a valuable ongoing asset to your growth.
The specific data and tools needed will differ from company to company but can be built around the same general framework. Here are four steps to consider in a data-driven process.
Set your company’s goals
Data means little if it can’t be applied to a future vision, goal, or destination. Some questions that can help shape your goals include:
- What growth benchmarks do you wish to achieve?
- Are there new products, markets, or fields you want to enter?
- How do you want to compare to competitors?
Goals will provide the road map upon which your data, such as key performance indicators, can chart your progress.
Determine which data to gather
Once your goals are established, data collection can begin. Some necessary data might already be regularly collected by your company, but you also might need to establish processes for collecting new information.
A variety of tools and data sets may be available depending on what is important to your process. Both internal and external data sources might be relevant to your needs.
Some metrics to consider, especially around goals relating to equipment financing, include:
- Throughput rate: What is the hourly output of equipment and services?
- Capacity: What is the maximum output of equipment, especially compared to other equipment in the production process?
- Maintenance records: How often does equipment need to be repaired? What is the average downtime?
- Utilization: How often are equipment or services actually in use?
- Return on investment (ROI): How do the total costs of equipment and maintenance compare to the value of its output?
It’s important to consider each piece of data separately and as part of a larger picture. For example, a certain part of your service process might be underutilized due to being obsolete or a poor fit for customers’ current needs. It could also be underutilized because other parts of the process can’t keep up with demands or regularly break down.
Where and how each equipment type factors into the process timeline can influence its priority for replacement or upgrading. It’s possible that financing a smaller piece of equipment first could yield greater initial returns than a larger overhaul.
Collect and visualize the data
Data can often be overwhelming when considered in its rawest forms. Streamlining and organizing your data can better help make connections, identify opportunities for growth, and provide more persuasive arguments to other decision makers in your company about suggested actions.
Many universal reporting tools can gather multiple data sets and easily display them in a dashboard, along with goals and progress. Such dashboards often can also be customized to display the most pertinent or important data for your needs and remove superfluous figures.
For growth-oriented goals, effective data visualization will better highlight bottlenecks in productivity. Line or bar charts can easily demonstrate which parts of a process are succeeding or struggling from one step to another. It can then be simpler to see which pieces of equipment correspond with problem areas.
Analyze and annotate the data
Data analytics in business benefits most from multiple sources and perspectives, as each may be capable of highlighting insights that were less visible in others. When analyzing the data you have collected, do not be afraid to bring in outside sources of data for comparison or asking others in your company to provide their interpretations. Both tactics can help you identify new patterns or insights.
Annotating your data can also help make further connections and inferences. This involves labeling your data for easier reference or adding additional context to flesh out the potential importance of certain sections.
Document all the insights arising from your data analysis. This includes new conclusions as well as ideas you might have previously had (and now have the data to confirm). Determine which conclusions are most applicable toward your business goals, sorting them in a manner that makes the most sense to you and key stakeholders.
For a plan including equipment financing, a helpful conclusion report could highlight the projected changes in productivity and returns for replacing or upgraded targeted equipment, as well as a recommended timeline for doing so.
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Team Financial Can Help You Act on Your Data
If new or updated equipment is part of your plans to grow, Team Financial Group can provide the financing to help you stay competitive.
We have worked with clients of all sizes to provide customized equipment financing solutions, meeting unique situations and needs. The right financing can help your company meet its future vision – and perhaps help you get there faster than initially expected.
Our financial specialists would love to discuss your equipment financing plans. Just provide some basic information and we’ll get in touch.
The content provided here is for informational purposes only. For financial advice, please contact our commercial financing experts.