In today's digital age, data isn't just a buzzword; it's a powerful tool that can transform how small businesses operate and grow.

But many small business owners feel intimidated by their numbers, financial reports, and spreadsheets alike.

If you cringed at even reading the word data, you’re in the right place!

So how do we utilize data to understand our businesses better and grow them faster?

I have 4 tips for you today that will help reframe your mindset around data and be able to better utilize that data within your business.

(Note: I’m focusing on using these skills to read financial reports and business data but these tactics can be applied to essentially any data you use for your business.)

Break Data Into ‘Bite Sized’ Chunks

If you break out in a sweat at the mere thought of looking at a spreadsheet of numbers, don’t further overwhelm yourself by demanding that you master them in an afternoon.

I always recommend that my clients start small.

Block out 10-15 minutes to start looking through your monthly financial statements or spreadsheets prepared by your financial team. Any more than 15 minutes to start, and you’re going to start to glaze over.

This is just enough time to hone in on one piece of the data, consider what that data is telling you, and draw a few conclusions.

The goal here: Walk away with one or two takeaway messages that you discovered from your reports.

By breaking your data analysis down into manageable chunks, you are effectively absorbing new skills while also training your brain that you are very capable of this whole ‘using data to gain business insights’ thing.

We often have to rewire ourselves not to panic at the first thought of numbers on a page.

Create a Systematic Approach to Data Analysis

Don’t just pull up your financial reports and bounce your eyes around frantically until something triggers a reaction.

Go in with a plan of how you will analyze your business data to gain the best insights.

Here’s an example:

If you’re looking through your Profit and Loss Statement (or Income Statement) at the end of the month, start with the ‘income’ section. Ask yourself these questions:

How did your income change this month?
Did it increase or decrease overall?
How are your different types of income reacting this month?
Did you meet the income goals you set for yourself?
If not, what specific categories of income fell short of what you expected or what you were aiming for?

(If you need a refresher on income categories, check out this blog!)

That right there probably gave you 5 takeaway points from your financial reports and we just started!

Let’s continue:

Next, you can move to the expenses section of your Profit and Loss Statement.

How were your direct expenses (or service/product dependent expenses) affected this month?
If your income went up, these direct expenses probably reacted the same way. If they didn’t, why do you think that was?
Are your operating expenses for the month where you expected them to be?
Were there any unexpected expenses or big investments that you made this month?

Did you get this far on your Profit and Loss? Great! You can set it aside until the next month.

If not, no worries. Take a break and come back to it with fresh eyes.

By pulling some insight from your income separately and your expenses separately, you now have a really clear picture of where your profit came from. And by having a plan up front, you were able to stay on task and avoid overwhelm.

If you work through your Profit and Loss Statement with this same system every single time, you’ll gain better insights, start to notice trends and be less intimidated to get started.

Now that you’ve mastered one report, stay to brainstorm a plan and questions you can use to analyze other data in your business.

Look for Trends In Your Data

The power of data analysis in your business isn’t just what happened in the past. It also needs to help us predict the future. This is where trends come in.

While you’re looking through those monthly reports each month, look for similarities and differences in the numbers over time. The similarities will begin to be your ‘baseline’ or the expected values. Then ask yourself, what is causing these differences?

If we can notice that certain revenue streams always increase around the holidays or that your business travel always tends to happen in the spring, we can start to plan for those fluctuations from the norm.

Better yet, we can make daily business decisions knowing exactly how those actions will affect our reports and ultimately, our profit.

Then suddenly, instead of being reactive to numbers on a page that happened last month, we start to become proactive in running our own business to meet our business goals.

If you feel like the information you’re provided isn’t providing insight in the right places, you may need to look at how it’s being displayed.

Collaborate with your bookkeeper, accountant, financial advisor, OBM or whoever is providing the data so that you can format it in the most effective way possible for you to absorb and analyze.

Try breaking things out by months, seasons, or categories to see what different trends emerge.

At the end of the day, it’s all about how the information is displayed to you.

By looking at broader trends in your business data, you can see how things change over time in the larger picture. This helps you plan for long term investments and keep a steady hand when a day or month is harder than then next.

Keep Looking at Your Data Again and Again

The unfortunate truth about getting good at something is that you can’t master it by doing it one time. Or two times or five times.

Similarly, you won’t get good at analyzing your business data if you do it once a year. These are muscles you need to consistently flex.

I recommend that my clients look at their data and financial reports monthly.

No matter how intimidated you are or how busy you think you might be, you can always find 10 minutes to review and pull out some useful information.

There are some months where you’ll review and say ‘yup, everything is as expected’ and other months, you’ll say ‘wow I didn’t realize our income did THAT last month’.

But either way, every single time you intentionally take time to dive into your data, you’re learning more about your business.