A data driven business is what all entrepreneurs and startup founders should aspire to build. Today, startups have access to tons of data far beyond what businesses used to have in the 90’s . This enormous amount of information about industries, market trends & consumer behaviour when garnered together, could be your biggest competitive advantage or better still, a key to survival.
Sadly, how many African startups understand the importance of data and utilize it in their businesses? Building a data driven startup involves making all business decisions based on data gathered from conception, to getting the product to the marketplace. Such information will enable the startup build different models of its product, make recommendation for consumers, explore more possibilities beyond initial ideas, and investigate how consumers and early adopters are using its product.
The process of building a data driven startup involves gathering data from various sources and making sense of it. That is, understanding the various forms of data you have at your disposal and how it relates to your business. From the data gathered, you can understand actions and events that trigger or generate revenue for your business, what products to stock, what customer type spends the most and many other things. However, getting reliable data in Africa could be a daunting task but never give up as it is achievable.
As an example, Tony is interested in starting an e-commerce store to sell sportswear. Before launching, he must ascertain that there is a market for his idea by conducting a market research. Whilst conducting his market research, he will gather two types of data: primary and secondary. Primary data refers to data gotten from early adopters & potential customers while secondary data refers to data gotten from statistics, reports, newspapers, studies from government agencies, trade associations, research firms and other available sources online. Once gathered, this information will be distilled into relevant actionable insights that can be used to make critical decisions about his business.
Another good example, would be a retail outlet using data to enhance its shopping experience by aligning products and location to retain the most profitable customer relationships. I.e. attempting to get products to customers in the most effective way whilst ensuring inventory availability and maintaining reduced cost.
As we enter a new era where data is easily accessed by everyone, those who begin to leverage the massive amount of data available for their startups, would gain competitive advantage and stay in business. Those who don’t will eventually fail.
Data is fundamental to business growth and should be used in all businesses. How are you using data in your startup? Let us know in the comments.
Image credit: r2hox
