Importance Of Data Analysis
Middle school science teacher here. I had to share this with you. So once upon a time, there was this graduate student, and he was conducting research on cockroaches. So he had this long table, and he put a cockroach on the end of the table and told it to jump, and it jumped to the end of the table. And so he picked up the cockroach, and he was super humane and pulled off two of the legs of the cockroach, and he set it down on the table again and he told it to jump, and it jumped halfway down the table. And he took the cockroach back to the beginning, he pulled off two more legs, set it down on the table, and told the cockroach to jump, and it jumped just a couple of inches. And so the student wrote his research paper and concluded that cockroaches without legs are deaf. So the reason that I share that story with you is data analysis is pretty complex. And you guys are just starting down this road in your business of analyzing these numbers, know that you're going to make mistakes. Kno...
w that it is not going to be like, oh, yeah, this is the perfect solution to my problem. But hang in there and pursue it and keep going on that, because it will give you answers, and you will learn from it, and it will be a good direction for your business, okay? So these are the kind of numbers that you're looking for. We talked about product lines, product line categories, we talked about total sales, but now we've added another column. Now we have a goal, and we have an actual for the total sales of our business. So here's what's really neat. When we write our business plans later on in the course, we're going to set these goals for our business so that they all add up so that we can pay ourselves what we need. So that's where this goal is going to come from. If you don't have a lot of experience in your business, you're going to make it up the first year and do your best to get there, but the second year, you're going to have a reasonable expectation for what you want to do. And then you can track what's actually happening and say yeah, I'm on track, or I'm not on track. And then you can calculate the percent of your work and your dollars, make sure they work. You're going to have your goal of sessions that you want to do compared with your actual sessions that you want to do, and then you're going to look at your sales averages. Are you on track with what you anticipated happening? Okay, so now I want to take a minute to practice with this. This is fictitious data, there's no consequences. Let's take a minute. If this was your business and you were looking at this on wine Wednesdays and you were determining what your next course as a business owner would be, what do you see in these numbers? Knowing that it's June, knowing that it's a wedding portrait senior business, what do you see in these numbers? It's a lot to take in, isn't it?
Senior photography. You had a goal of three. I'm looking at sessions now, I started there. You have a goal of three sessions and two sessions, and so you were down just a bit.
Okay, so when we're looking at sessions, you started looking at the sessions because it's the early warning sign in the business. Way to go! All right, so we planned to have three sessions in June. We only had one session for East High School. For South High School, we planned to have two sessions, but we had three sessions. Okay, so that's probably a wash, right? Except what happened? Let's look a little deeper at our high school senior numbers.
Difference in dollars. Difference in sales average.
Yeah, exactly. You would think all senior sessions are created equal, except when we look at our goal sales average, we knew going into this that there was a discrepancy between what the students at East High School invested versus the students at South High School. And then what actually happened was radically different. So this is a big deal, even having the extra session from South High School didn't make up for the one less session here. So you've got to really pay attention to that. Now, when we look at our total sales over here, what we planned versus what we got, what does this tell you as a business owner for seniors? We planned on, what, $5,500, $5,400 coming in, and we brought in $2000? What does this business owner do based on this information?
Either de-emphasize senior marketing or potentially consider putting more marketing dollars into it. It's a choice though. You have to cut your losses or take another stab at it.
Exactly. Something's got to give, because what happens in the end is you can't pay yourself. So by tracking this, you know there is a problem. This is the red flag going off in your business. It's the siren, the alarm going off saying hold on a minute, something's wrong. So something happened bad in the sales process here. Something went really well in the sales process here. Now these are all small sample sizes, so there could have been something weird that happened. It could have been a session you gave away for a sample. You would know that as a business owner, but what it tells you is you better pay attention or you're not going to be able to pay your rent. Bottom line. Okay. Anything else that strikes you that this business owner needs to do? If this were me, I would be picking up the phone and calling every senior I ever photographed that had a sibling and saying, hey, I know you're going to be a senior next year. I would love to create portraits for you. I have this really great idea, come on in. Would you be a model for me? I would love to photograph you. Then if you wanted any images, that's fine, but at least I would be doing something to get someone in front of my camera, right? Yes.
Something else to consider, especially for people just getting into their businesses is it's not just, well, this is kind of what I wanted, this didn't pan out so well, I need to market or call. But additionally, am I targeting that volume for this product line at the correct time of year, right? So not every market does seniors primarily in June. So maybe for all you know it's really heavy duty in March, and you just haven't caught on and you missed the boat. So it's just something else to think about.
That's a very good insight. So maybe the business took off earlier in the year than anticipated, and as a business owner, you would know that information and be able to include that in your analysis to know if it's like, abandon ship and get a job, or if it's we're doing okay, or I really got to change tactics and increase my marketing and get some people in here. That's great advice. Okay, all right. So now we're going to shift. This is the June business. What we've seen, sessions are down. We expected five, we got four. We expected six, we were one up on engagements. We were down on portraits. We were down on seniors. So let's fast forward this business to October. Let's take a look here, and let's go to sessions. So weddings, we planned for 20, we got 20. Whew, good news. Portraits, we planned for 25, we have 22. That's a warning, be careful. Caution. Seniors, we planned for 35, we got 37. So between June and October, what did this business owner do? Ramped up the marketing, right? Okay. Now let's go to the big picture. Let's look at our sales averages and see how this compares. So our goal was $3,500, and we were at $2,800. So even though we were okay on numbers, yikes. This is a problem, okay? Yes, so here, we've got 1,500 a goal, 1,600. So we were up a little bit on our engagement sessions. That's good. That's okay. 2,000 we were up on family portraits. We were up on children, that's good. All good things. We were up on seniors, and we figured out what that problem was, that really low thing. We ironed out our sales strategy here. Okay? So if you were this business owner at the end of the year, keeping in mind what was going on in June, how would it be? You recovered. You're not having to go get a job for the holiday season, right? So that's the kind of stuff that this information will tell you if you keep track of it on a regular basis. And I'll tell you, it's a lot easier to just update it a little bit every week than it is to get to June and be like, oh, God, I still haven't done that. I really need to do that. It's so much easier to put off and procrastinate if you have six months of data to deal with instead of six days to deal with. So build it into the process of your business. Figure out a way to track this so that you can be a proactive business owner.