Today’s article is written by my business partner, Dan Bowser. Together, we’ve created a company called BusinessCashPulseTM, which provides business intelligence tools for growing businesses.
In his other life, Dan runs a company called Value Insights and for the past 25 years, he’s specialized in business valuations, mergers, and acquisitions.
A friend recently complained of “information overload.” As he described it, he had so much information about his business that he could not sort through it all to make sound decisions. At the risk of quibbling, I suggested his problem was not a surplus of information, but rather he was suffering from “data overload.”
What is the difference, if there is a difference? Data is used as a synonym for information in everyday language. However, in the exact sciences there is a distinction between data and information. Data is a measurement. For example, the temperature is 40°. That qualifies as data because it is a measurement of temperature. However, it is not information.
Information is the result of gathering, processing, analyzing, and interpreting data in a way that is useful to the user. Information requires a context in which it is to be used. In the preceding sentence we have a piece of data, but it is not very helpful. For example, we don’t know whether the temperature is measured in Fahrenheit (“F”) or Celsius (“C”). This is rather important since 40° C is 104° F while 40° F is 4.4° C. Adding the scale may increase the sophistication of the data, but context is needed to convert it to information. Perhaps you are preparing to go out and want to dress for the weather. At the moment you pose the question of appropriate dress, the data becomes useful. It becomes information.
This distinction is important to business people who want to create and build a successful business. The common financial statements (the Balance Sheet and the Income Statement or P&L) are chock full of data. The fact that sales were $1 million last year is interesting, but, in and of itself, it is not helpful. Knowing that the Gross Profit Margin (“GPM”) is 33% is data, not information, because we have not yet put it into a context to be useful.
Let’s add an additional piece of data. Research reveals that the average business in the same industry has a GPM of 50%. Suddenly our two pieces of data become information. We can analyze and compare our business against a known standard (other businesses like ours). We now know that our business generates significantly less gross profit than the average. We have information that our business is less profitable, at least in this one area of measurement. This information is helpful because it replaces a vague feeling that something isn’t quite right with identification of the problem area. Knowing the general nature of the problem directs our attention toward steps to correct the problem.
Additional research indicates two typical causes of a low GPM. The first is setting prices too low and the second is failure to control waste and theft in the delivery of our product or service. Further analysis reveals that we confused margin with markup and priced our goods lower than intended. The problem was discovered and the solution applied because we refused to stop at data collection and went in search of information.
This example is simple. However, it is totally valid in its application. As a business owner or manager, you must constantly seek information that will help you survive and thrive. Advisors and software programs typically provide data. Your job is to ask what it all means. How can you use the data to create information? You need to make strategic decisions for your business and that requires the best information you can get. Data will not do the job.
Recognition of the need for useful information is leading entrepreneurs to develop strategic planning software that converts your financial statement data into information. We’ve done just that. So, if you are looking for how to use your financial data to make more money and keep more of what you make, take a look at BusinessCashPulse.
I have a knack of knowing when to drop into a bookstore because I have a sense that a book on the shelf is trying to find me. I know this sounds airy-fairy, but I’ve come to trust it.
Over the holidays, I was in a bookstore, buying presents for my kids. When I got in line to pay, I found the line snaking through and around the various aisles, at least 30 people long!
I’m not one to waste a second of potential productive time, so after I got into the line, I looked right up at the shelf of books next to me. Lo and behold, a book found me.
The title of one particular book, Accelerate: 20 Practical Lessons to Boost Momentum, by Dan Coughlin, immediately caught my attention, so I pulled the book off the shelf and immediately started reading it on the way to the cashier. Dan is an Executive Coach who has worked with leaders from Fortune 500 companies and major privately-held firms.
The first chapter is all about “enhancing personal effectiveness” and he points out that one delivers their greatest value when one “knows their strengths, they know their passions, and they spend the vast majority of their day doing things they are good at and passionate about.”
He goes on to introduce a principle called “operating at the intersection of greatness.” He writes “the intersection of greatness is the point where the manager’s greatest value intersects with her organization’s most important desired business outcomes and her client’s most important business outcomes.”
These are simple, yet clear and powerful principles.
Now ask yourself the following questions:
- What are your strengths?
- What are you passionate about?
- Do you spend the majority of your time on things that you are both passionate about and good at?
- What are the most important business outcomes of your organization?
- What are your client’s most important business outcomes?
Ultimately, what’s the best way for you to operate at the intersection of greatness?
In today’s Information Age, we have instantaneous access to an over-abundance of information. Through the Internet, we can search for information, products, tools, and other resources at all hours of day and night. We can purchase books and other subscriptions through websites. Even when purchasing physical books, we can also purchase the digital download version at the same time.
We can amass all the information we want. Become a walking encyclopedia if you want….
…and it won’t do you a bit of good. It won’t make you healthier, wealthier, or wiser.
Information is NOT power. That’s a myth. Information is, well, information. It’s what you do with the information that makes any difference at all.
So, once you’ve gathered information, the next critical step is to assimilate or integrate it. Integration takes time. For some of us, there’s an incubation period during which we need to percolate on the information, maybe tinker with it, before it settles in and makes sense. It takes time for us to get familiar and comfortable with the information, to understand how best to apply it to our particular situation, goals, and dreams.
Even after the information you acquired gets integrated into your beliefs, your thinking, your very being, your business, and so on, that information still won’t make any difference, until…
…until you take the steps to implement that information. Implementation means putting that information to work for you. It means taking that information and turning it into powerful strategies and action steps that produce the results you want for your business and your life.
So, you can attend all the workshops you want, read as much as you want, buy all the training and information products you want. Just remember that you must also commit to doing the work to assimilate the information and allocate the time to do so. And then, and only then, you’ll be ready for the next phase of work, which is Action, Action, Action!
That leaves us with three “I’s” of business success:
One without the other isn’t as powerful as having the synergy of all three. Staying aware of keeping all three elements together gives you a simple way to stay focused on what produces the outcomes you desire in your business and your life.