Peerview Data Insights

PLEASE NOTE: the following is an excerpt from "20 Competitive Metrics Every Business Needs to Know," which is now available as a free download here.

Performance Metric: LEVERAGE

Definition:  A MEASUREMENT OF HOW A COMPANY USES DEBT TO FURTHER ITS OPERATIONS

Importance:  Companies use debt to acquire assets in the hope that the income generated from those assets will be greater than the cost to service that debt over time. In most cases, the greater the debt the greater the risk because a company that is highly leveraged is more likely to go bankrupt than one that isn't. On the other hand, a company that has very low levels of debt may not taking advantage of the growth opportunities that additional leverage may offer. 

Nobody is an industry of one. Everybody competes for customers. You can't beat anyone if you're evaluating your performance in a vacuum

Nobody needs another report.

As one of our clients said, "I already get fat stacks of business performance data, what I don't have is enough time to go through them unless there's a problem."

Sound familiar?

Most of us are too busy running our business to ever really take a step back and analyze it.

The problem with running your business this way is this: it's a huge miss.

In study after study, Salesforce.com, Bain & Co., Constant Contact, Accenture and GE all found that companies that analyze their performance data do better:

• 2x more likely to have top-quartile performance
• 5x more likely to make faster decisions
• 8x more likely to report positive outcomes of any kind

So what's holding everyone else back?

PLEASE NOTE: the following is an excerpt from "20 Competitive Metrics Every Business Needs to Know," which is now available as a free download here.

Performance Metric: LIQUIDITY

Definition:  A MEASUREMENT OF A COMPANY'S ABILITY TO SATISFY ITS SHORT-TERM OBLIGATIONS AS AND WHEN THEY FALL DUE

Importance:  From a practical standpoint, liquidity matters because a company that doesn't have enough money on hand to make payroll, cut checks to suppliers and keep its lights on can't stay in business very long. More importantly, because it's so critical to a company's on-going success, it also serves as an indirect measure of management's core competency — if a CEO or CFO can't adequately plan for the inevitable ups and downs, what else is he or she missing?

Nobody needs another report.

As one of our clients said, "I already get fat stacks of business performance data, what I don't have is enough time to go through them unless there's a problem."

Sound familiar?

Most of us are too busy running our business to ever really take a step back and analyze it.

The problem is this: that's a huge miss.

In study after study, Salesforce.com, Bain & Co., Constant Contact, Accenture and GE all found that companies that analyze their performance data do better:

• 2x more likely to have top-quartile performance
• 5x more likely to make faster decisions
• 8x more likely to report positive outcomes of any kind

So what's holding everyone else back?

PLEASE NOTE: the following is an excerpt from "20 Competitive Metrics Every Business Needs to Know," which is now available as a free download here.

Performance Metric: PROFITABILITY

Definition:  THE DIFFERENCE BETWEEN TOTAL REVENUE AND TOTAL EXPENSES

Importance:  Sometimes profit is meaningful, sometimes it isn't.

Insight:  Because it can be manipulated via the timing or choice of various accounting methods, it can say more about owner/management priorities and/or industry traditions than a company's ability to generate revenue while controlling costs. For this reason, analysts rely on common-sized, comparative ratios to put "profitability" in context so they can more accurately gauge how effectively or ineffectively a company is being operated.

Just a quick post to say we've updated our eBook “20 Competitive Metrics Every Business Needs to Know.”

Even if you're not using our competitive analysis & benchmarking tool to cut costs or boost your growth rate, it’s a great, all-around playbook for improving finance, HR, sales & marketing and management.

PLEASE NOTE: the following is an excerpt from "20 Competitive Metrics Every Business Needs to Know," which is now available as a free download here.

Performance Metric: GROWTH

Definition:  A RELATIVE MEASUREMENT OF THE YEAR-OVER-YEAR CHANGE IN TOTAL COMPANY REVENUE

Importance:  Growth is a strong indicator of product/market fit, but because it can vary significantly by industry, by year or by company life stage, it should always be benchmarked competitively.

Underlying causes/influencing factors:  

• price
• product
• promotion (marketing)
• place
• process
• partners (vendors, distributors, suppliers, etc.)
• people (personnel)

Not to be alarmist, but there seem to be more and more articles lately like this one from The Wall Street Journal:

RISK GROWS OF MARKETS SPARKING RECESSION

Is the U.S. headed for recession? The markets suggest so.

With Thursday’s sell off, the Dow Jones Industrial Average is now down 14.5% from its all-time high last May. Yields on risky bonds continue to climb, while investors have sought safety in U.S. Treasurys, sending those yields lower. And oil has hit a nearly 12½-year low.

Yet the economic data show no recession. Job growth in January was healthy, and employers are having trouble filling vacancies.

This dichotomy is neatly captured by two indexes compiled by Cornerstone Macro. One, using financial indicators such as the stock market and corporate bond yields, puts the probability the U.S. is now in recession at 50%. The other, which adds in macroeconomic data such as loan delinquencies and inflation-adjusted income, puts the probability at just 28%.

Of course markets often wrongly predict recessions. But in some circumstances they can help bring them about. Economic turning points are unpredictable because they are caused by changes in psychology, not just mechanical factors such as interest rates and wages and salaries. Markets influence that psychology by signaling to businesses whether they should invest or hire. Fear of recession can thus be self-fulfilling.

Since nobody knows if we're really headed for trouble or not, it's probably a good time to take a step back and make sure your company is firing on all cylinders just in case.

So... where to begin?

There's so much information out there about big data it's easy to get overloaded.

We sifted through as many of the insights and statistics we could find and pulled together what we think are the seven key take-aways for big data and business:

1. Companies are generating more performance data than ever before, yet only about 12% of it is being analyzed.
2. The market for business intelligence and data analysis is projected to grow from around $81 billion today to over $141 billion by 2020.
3. What does that mean for individual companies? Companies with 1000+ employees are expected to spend about $8m a year on BI & analytics; companies with less than 1000 employees are expected to spend $1.6m.
4. Why? What do companies that invest in analytics hope to get? 73% expect to increase revenue, 61% expect to improve the quality and speed of decision-making, and 57% expect to improve planning & forcasting.
5. Do they? According to Bain & Co. and Salesforce, companies that use analytics are 2x more likley to have top-quartile performance, 5x more likely to make faster decisions and 8x more likley to improve operational outcomes.
6. With findings like that, you'd think every company would analyze its performance data, but that's not the case. Why? Most cite cost and time as barriers, but a lot just don't have the expertise or tools. (Which is why we're in business.)
7. So who is using analytics? Here are adoption rates by industry.

What's your pain point?

One of the main reasons companies use our strategic management & analysis tool is to identify, isolate and address the issues that are causing them trouble.

What's interesting is that whatever specific problem the company is dealing with — high turnover, bad cash flow, an unengaging brand — it can often be traced back to the same core set of questions or challenges:

1. How fast should we grow?
2. How much revenue should we expect from our people?
3. Do our costs compare to our competitors?
4. Is our marketing right?
5. Are we missing anything obvious?

Why are these questions at the heart of so many problems?

Companies aren't as different as they think. Even though the terrain, timing and mode of transporation may differ, the destination is usually the same: a place of where growth, value and profitability are higher.

Perhaps what's more surprising than the fact that most business problems seem to be related to these five questions is the fact that most companies don't bother to integrate the asking and answering of them into their on-going planning process.