Even though it’s sometimes seen as an enterprise-level business challenge, operational efficiency is a critical focus area for small to medium businesses (SMBs).
Operational efficiency is about your business’s ability to deliver its products or services in an optimized and cost-effective way, minimizing waste and maximizing productivity. As a small business owner navigating growth, one of your biggest priorities has to be achieving operational efficiency. When you scale your business, you'll also scale your systems, processes, and workflows. And any inefficiencies in those systems will only multiply as you grow.
For example, let's say you have one salesperson who has to manually enter data from sales calls. That manual data entry might seem manageable for just one person. However, if you plan to quickly grow your sales team to 10 or 50 people, that same manual process suddenly represents thousands of dollars of lost productivity.
The opposite is also true — if you can streamline and automate processes like data entry now while still a smaller business, those efficiencies will be amplified as you grow. That’s why achieving operational efficiency from the start is vital. Otherwise, you risk implementing costly time and productivity drains that'll just keep getting worse as your business expands according to your growth plans.
While there are a lot of general resources out there about how to improve operational efficiency, one of the most common and painful sources of poor operational efficiency lies in your approach to data management. Whether it’s important customer data stuck in an endless array of Google Sheets or slow manual reporting processes, how you deal with data in your startup phase isn’t going to help make your operations efficient and scalable for future growth.
In this blog post, we'll explore the telltale signs and underlying problems of how your approach to data could be holding your business back and provide practical solutions to help you break down silos and gain a holistic view of your operations.
Signs your approach to data is hurting operational efficiency
As we’ve established, operational efficiency is not a "nice-to-have" but a necessity for SMBs to thrive and stay ahead of the curve, as it directly impacts resources, competitiveness, productivity, decision-making, and long-term sustainability.
When your business scales quickly, the old ways you used to track and manage information just don't cut it anymore. The amount of data you're dealing with increases dramatically — think about how many more customer records, invoices, inventory logs, etc., you’ll have compared to when you were just starting out.
Suddenly, the simple spreadsheet or basic software you once relied on can't efficiently handle all the new complexity and information it’s receiving.
Do any of these situations sound painfully familiar?:
- You have a shared cloud or drive filled with customer data you can never seem to locate when needed, or worse, it’s outdated or incorrect
- Multiple employees spend hours every week re-entering the same data into different systems that don't sync
- You're constantly having to dig through a ton of Google Sheets and databases to pull basic reports
- Customer orders or inquiries are falling through the cracks because key information gets lost
If any of those processes or scenarios sound familiar to you, it’s probably time to take a closer look at how your approach to data might be hurting your operational efficiency.
Sign #1: Manual data input and reporting
One of the most obvious signs of an inefficient approach to data management is the reliance on manual data input and reporting processes. If your team is still manually entering data into spreadsheets, databases, or apps, you're wasting huge amounts of time on tedious, error-prone work. As you grow, what may have been manageable with a small amount of data becomes unsustainable as that volume increases.
On the reporting and analysis side, continuing to export data and build reports in Excel or PowerPoint manually is also incredibly inefficient at scale - especially if you need daily or weekly reports. However, not all reporting necessarily needs to be automated. For example, if it's a high-stakes quarterly report that you’re going to share with investors, putting time into manually reviewing the data to perfect the narrative and ensure your data is correct might be the best approach.
But for more routine reporting (weekly team updates, KPI status, etc.), a manual process is definitely an unnecessary time-waster. Those processes should be automated as much as possible.
The right balance is automating anything that is recurring, high-volume, and doesn't require a lot of analysis while leaving room for manual processes for any mission-critical or customized reporting when needed.
Solution: Automate data entry and reporting:
- Use form builders like Google Forms or Microsoft Forms to create easy data entry forms that feed directly into spreadsheets.
- Leverage tools like Zapier or Microsoft Power Automate to automate data transfers between different apps and systems.
- Set up data validation rules in your spreadsheets to minimize errors during manual entry.
- Explore tools like KPI dashboards that can automate reports from your data sources.
Dale Pearson
Sign #2: Different sources of truth
As your business grows, different teams may start using their own terminologies, data sources, or definitions of metrics. This can lead to what’s known as different ‘sources of truth’ for the same metrics. Let’s say an e-commerce company has teams across sales, inventory, and marketing, each maintaining its own data sources that report on total sales revenue. However, because they have different data sources (and even ways of measuring sales revenue), this can lead to a major issue in the business.
When there’s no single source of truth where your most important data lives, terminologies for similar metrics, or different ways of calculating results about vital metrics, it often results in conflicting information, miscommunication, and ineffective decision-making.
Solution: Eliminate different sources of truth:
- As a team, audit where discrepancies exist and dig into the reasons. See if you have instances where your teams are calculating the same (or similar) metrics differently by different systems or methods.
- Where those metrics are different, agree to call them different things. For example, distinguish between "signup" for a new free trial user versus "subscriber" for someone who converts to a paid plan. Avoid ambiguous terms like "conversion" that could get misconstrued between teams.
- Once you understand the underlying causes, agree on standard definitions and methodologies to use company-wide going forward.
- Designate specific sources as the "source of truth" for each important metric. Clearly document and communicate these sources in an easy-to-access place for the entire team.
- Use centralized KPI dashboards to provide transparency into key metrics and where they are sourced from.
Dale Pearson
Sign #3: Broken and slow feedback loops
Operational efficiency relies on continuous feedback loops, where insights from one area of the business or team will inform decisions and processes in another, keeping your business agile and adaptive. However, when data is hard to access, and ways of communicating the status of your goals are slow and reliant on incorrect data, these feedback loops break down, hindering collaboration and stopping progress.
For example, let's say your product team develops a new feature, but getting customer usage and sentiment data from customer support is a long, drawn-out process. By the time they finally get the feedback, opportunities to quickly iterate or double down on the successful improvements have already been missed.
When insights and data are shared slowly across a business, teams get out of sync, and collaboration suffers. The end result? Your business loses its ability to be agile and adapt processes quickly based on continual feedback loops.
Solution: Fix slow, broken feedback loops:
- Use tools like a dedicated KPI dashboard solution to create interactive dashboards and reports. Share these dashboards with relevant teams, enabling data-driven discussions and feedback based on real-time insights.
- Try tools like Trello, Asana, or ClickUp to create shared project boards and tasks.
- Use collaboration tools like Slack, Microsoft Teams, or Google Chat to create dedicated channels for cross-functional discussions and data sharing.
- Encourage teams to share updates, insights, and data-driven decisions in these channels, fostering real-time communication and feedback. Even better, share real-time insights daily through these channels to make sure your teams are aligned.
Sign #4: Lack of real-time visibility
Without a clear and accessible approach to data management, it becomes hard to gain real-time visibility into your business's performance. Relying on outdated or inaccurate data from manual spreadsheets, for example, can lead to missed opportunities, delayed responses to market changes, and poor allocation of resources.
Solution: Improve real-time visibility of data:
- Make sure you have automated data refreshes set up to ensure your dashboards or reports reflect the latest information - if you’re not using a dashboard tool, this might require additional add-ons or tools like data connectors or APIs that can feed live data into your visualization tools.
- Set up alert systems or notifications to highlight critical changes or deviations from your goals.
- Provide mobile access to your dashboards and reports for on-the-go visibility.
Conclusion
Improving your approach to data management is crucial for SMBs who want to improve operational efficiency and drive sustainable growth. Ultimately, the goal should be to make data open, accessible, and visible in real-time across your organization. When everyone, from leadership to junior employees, has access to the latest performance metrics and operational data, they are empowered to quickly identify and solve issues and make swift and informed business decisions.
By addressing these underlying problems around your approach to data and trying out some of these practical solutions, you'll be well on your way to breaking down communication silos, improving operational efficiency, and positioning your small business for continued, healthy growth.
If you want to establish a data-driven culture in your business and track your progress with clear and actionable KPI dashboards, subscribe to our monthly newsletter below for expert guidance on setting goals, metrics, and interpreting data.
