Big Data. How to use the data that your business gather in imrpove your business

Big Data: How to use the data that your business gathers  to improve your business.

Big Data is one of the new buzz words that is been used at the moment. It refers in my opinion to the data that your company can gather from it operations.  The concept is that you can use this data to improve the efficiency of your business. It can be used for a multitude of purposes depending on what information your gather and depending on how you decide to try and use it. This data can be gathered from your customers or from your suppliers .It can be gathered from your contacts with out side agencies. It can come from your interactions with social media sites on the internet or you could do market research or set in place a database which is updated as you make contact with third parties.

The three attributes of data gathering have been defined as the three v’s of volume, velocity and variety. In the modern world, technology has enabled more and more data to be gathered and analysed (this refers to the volume of data).This is been accumulated at much greater speed (velocity) and it can come from a much wider variety of sources. In this regard the world is truly becoming a global market which is smaller and faster and varied.

A lot of the bigger global corporations have realised the value of utilising the data it can gather to its full potential in order to maximise the returns it can achieve. Some have even started to place a value on data in their accounts. It is these firms that realise that data can make such a huge difference to their profitability and return to stakeholders. The problem often is that people do not know how to approach the information they have available to them in order to use it in a productive manner.

In my opinion the solution to this problem is to ask yourself what question does the information you have available answer. By so doing you can brainstorm in order to make full use of it. Often times the benefit of analysing data is lost because the volume or complexity is too much for people to comprehend. This is where taking small bits of it and working up to a full matrix of what you have available may make it more accessible.

A really good example of using big data to expand and focus a business is Tesco’s clubcard. When the clubcard was introduced the information it provided allowed Tesco to grow from the third biggest retailer in the UK to the third biggest retailer in the world. They were able to see for example which products were most popular in which stores and aim their purchasing to maximise sales. They also would have been able to see what quality of different products were the best sellers and in which stores. So that stores with customers who bought cheaper brand products could be stocked to reflect this pattern

Your business can do the same. You have a host of information available to you that you could use. You could take a look at what services or products that customers are looking for the most and market your product towards that, By asking customer questions about where they heard about the firm, you could decide which advertising methods were most productive for certain groups of customers and be more specific in what products and services you were advertising in any geographical area and through which media channel.

I also think this can extend to other areas of the business from the purchase of raw materials and stock through to production methods, By analysing what customers requirements are in terms of the quality of product sold or the type of extras that they purchase, you could reduce your capital investment in stock by concentrating your purchases on the products that are the most in demand. This is especially relevant in a economy where the banks are not forthcoming with finance for business investment. It may even facilitate you implementing a just in time system of stock control which has the benefit of dramatically reducing your need for working capital investment in stocks. The implementation of a total quality management system by using the data available to you from your suppliers and your customers may allow you to implement a just in time system which will be both functional and reliable.

Relevant data can also come from in house sources. If you are a manufacturer you could monitor and gather information about the production process from the raw material input to the effectiveness of machinery, to the quality of the finished product. This data could then be used to decide on an optimum mix of quality and production techniques which produce a finished product which meets customer requirements and which maximise your profitability

The growth in the use of the internet and social media has allowed for analytical models to be developed which can really help you to target your products and services to demographic and geographical markets in a way which can maximise your sales and return on investment and profitability. One of the concepts in managerial economics that always fascinated me, was price discrimination and I feel that true price discrimination can be achieved by using the data available to a business in order to maximise the sales price achieved in particular markets. This is particularly relevant to globalised companies such as motor car manufacturers’ who can charge different prices for different spec car models in different geographical areas. The standard features in the Honda civic you buy in Ireland are a lot different to the standard spec of a Honda civic bought in the United Kingdom.

So my advice is to step back from your day to day activities and take an overall view of your business by looking at the information that is available at your finger tips. You just have to discover where this information is and then decide how to use it.

Author Frank McGivney BA (1^st Class honours) ACMA CGMA 14 March 2013

advice on setting up as Company or sole trader

You have decided to take control of your destiny and start up your own business. The route of self employment is a long and sometimes difficult one with a lot of benefits and potential pitfalls. Once you have decided upon what business you are going to run, you will have presumably loads of marketing ideas and financial aspirations and so forth. However the first practical step to starting up your business is to decide how the business will operate. The main choices are as a Sole Trader/Partnership or as an incorporated company. A sole trader and partnership are both similar in that the business is operated by the owners as self employed people in their own right. The main difference between sole traders and partnerships is whether there is one owner or more than one owner of the business. I am currently writing an in-depth article about the consequences of going into a partnership with someone. This current article is dealing with the fundamental choice of been self employed in your own right or in starting a company.
A company is a separate legal entity to the people who own it. It can trade, own and operate a bank account, be sued, liquidate (cease trading), etc on its own behalf. The big advantages of a company structure is that it offers limited liability and a low corporation tax rate. Limited liability means that a company can only be sued for whatever it owns itself so that the shareholders (owners) private assets are protected. Companies are taxed on their profits by way of corporation tax. The taxable profits are calculated after the director’s wages have been paid. In Ireland the current corporation tax rate is approximately a fifth of the marginal highest income tax rate. However in return for these benefit’s the administration and accounting requirements for a company are more stringent and involve a greater cost and consume more time than a sole trader's. Also any money that a director takes out of a company is taxed at income tax rates and therefore the corporation tax rate is only availed of if the company makes more money than the directors are paid as wages
A sole trader is a person who operates a business in their own right. As such they are solely the ones taking the risk of the business failing they are also the ones who benefit fully if the business is a success and makes a profit. A sole trader does not have limited liability and thus his/her own assets such as the family home can be under threat if the business is sued or it fails to pay all its creditors or debts. However a sole trader is a simpler way of running a business. The returns to the Revenue Commissioners are less arduous than the returns for a company. If the business has a small turnover with relatively low risk of been sued or if such risk can be insured against then this is a good choice. All the advantages and disadvantages of both options should be weighed against each other based on the specific business been proposed and then an informed decision made. The assistance of a trained professional advisor such as a solicitor or accountant is recommended to ensure the best outcome
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Frank McGivney & Co. Ltd Chartered Management Accountant fmcgivney@live.com
 Frank McGivney & Co. Chartered Management Accountants Kells, Co Meath