We can’t tell where to prioritize our investments

Not being able to tell where to prioritize your investment decisions is not anyone’s idea of a good business plan. Whether you’re a CEO or a small business owner, you want to build a sustainable company. If you’re not able to make data driven decisions about how to solve operational and logistical challenges and anticipate what type of investments will have the biggest impact, you might prioritize the wrong things and throw good money after bad.

What Happens When You Can’t Tell Where to Rank Your Investment Decisions

Lacking clarity about the priority of your investment decisions means you might invest too much money in non-growth aspects of your business. And you might spend too little on the growth aspects of your business.

Bad investment decisions can sink your company. A Business Insider survey shows the top reasons why small businesses fail. These reasons for business failure are often tied to poor investment decisions. The reasons include:

• Creating cash flow problems: 82% had cash flow problems
• Investing in the wrong product: 42% invested in an unneeded product or service
• Missing your revenue targets: 29% ran out of cash
• Hiring the wrong talent: 23% didn’t have the right team
• Falling behind your competition: 19% out-competed on capability

Like most CEOs, you have many factors that go into your investment decisions. With all these factors, you also need to increase customer demand with a limited budget while improving efficiencies and cutting costs.

There are three main reasons most CEOs can’t tell where to focus on their investment decisions.

You can’t run scenarios
Lack of data science expertise makes it difficult to find the most profitable investment or forecast outcomes. As a result, you may prioritize advertising and marketing when you should invest in your supply chain.

Lack of benefit-cost analysis
Because you only see the big picture but not the impact of individual pieces, you’re unable to complete a full cost-benefit review. This lack of analysis blinds you to what areas of your business operations truly need strengthening.

Misalignment of key performance indicators (KPI)
There might be a lack of alignment among your KPIs. You and your team might miss how one department’s KPIs impact those of another department’s. This type of misunderstanding could cause an individual group to meet KPI targets, but which have negative impacts on the rest of the business.

How Are Other Companies Solving Investment Decision Making Problems

Most companies are adopting or looking to adopt data analytics to help solve their business problems and prioritize investments. For example, energy companies use analytics to make better capital investment decisions. Commercial real estate firms are beginning to use analytics to make investment decisions. Other companies use data to determine which products to bring to market or where to expand their footprint. In short, organizations are applying the whole range of data sciences to help them solve operations and logistical challenges that once relied on “gut” instinct to resolve.

How Data Analytics Can Help You See Where to Prioritize Your Investment Decisions

Data analytics is a powerful tool that can improve your investment decisions, especially when trying to solve problems with your existing operations. Big data can help you see the big picture as well as identify gaps, and give you insight into how to fix them.

So how can data analytics improve your investment decisions? It can:

• Describe current investments and processes to better assess the current state of your operations and logistics.
• Predict what will happen if current trends and behaviors continue.
• Prescribe what is the likely outcome if targeted changes are made, helping direct smart investment decisions.

Companies need more than just technology to solve business problems and prioritize investments. Chisel provides access to the talent organizations need to innovate, collaborate, and scale analytics to help solve these challenges. We help companies find the needed data professionals for project work or permanent roles. Sign up today to find validated data specialists – definitely a good investment