Do you know the current state of your business? Wouldn’t it be great if you could forecast sales or see patterns affecting your company? By using the right tools, this may be possible. Using your financial data to spot trends helps managers plan for future growth as well as gauging impactful business decisions. The more managers know about the state of their business and its environment; the better equipped they are to make pinpoint decisions that will positively impact your company.
Why is trend analysis beneficial? We all know a company’s financial data provides insight into the health of the business. Using data to spot trends allows managers to plan for opportunities and make informed decisions. For instance, rental companies look to maximize the utilization of their equipment. If a piece of equipment is always in high demand and getting maximum rate; trend analysis will determine the contributing factors. What are the root causes for the increase in demand and does it make sense to purchase additional equipment to meet the demand? On the flip side, if the equipment is sitting in the yard un-rented and not earning revenue; analyzing trends help reach a conclusion. Maybe it’s a seasonal issue or maybe the current rate charged is greater than the market rate. In addition to the financial impact, analyzing trends can assist with the operations of the business. Trends can determine whether a piece of equipment is consistently breaking down and if it is constantly being repaired. Is it an issue due to the quality of construction from the manufacturer or from the abuse of a customer? Looking at trends can also help with personnel planning. What are the peak times of the business and how can I plan to ensure I have the proper staffing to fully service our clients?
Clearly, analyzing trends requires data. The challenge is the accessibility to the data and how its deciphered and interpreted. Most companies already capture data and use the information to gauge their business’s performance as a whole. Vital to spotting trends is getting the proper data, the ability to understand the data and make informed decisions based upon those trends. Also, in order to get the most out of the data, you must have certain capabilities.
- It would be beneficial to have all of the data centralized. Having the data across multiple systems or programs creates unnecessary impediments. Running different reports on separate systems would make it difficult to analyze. Having reports centralized makes it easy for managers to get the information and analyze the data to see the true impact.
- Accessibility to the data is also crucial. Data is not useful if the decision makers are unable to access it at any given time. Managers should not be limited to getting the information only when they’re at the office. The ability to access your data remotely upon demand allows managers to make decisions based upon real time updates. In today’s environment, everyone is on the go and having access to the reports anywhere and anytime is vital.
- The ability to drill down into the data to narrow the scope in trend spotting is key. Looking at the overall information to see the overall performance as a whole is fine, but in order to spot trends; it is important to look at key data at a granular level. Knowing what’s contributing to your success or the challenges by narrowing your scope provides insight on the specifics and allows changes to be made.
Utilizing your data to spot trends will help you make the most informed decisions to affect your bottom line. If you would like to see how we could help spot trends in your business, give us a call.