As the founder of a startup, it’s likely you play some sort of leadership role. Whether it be on a team to accomplish certain goals or guiding other team leaders, it’s important to have strong skills and a solid decision-making process to help your startup grow.
Establishing those skills and processes can be done in a variety of ways, but using data is one of the most effective. Data can be an incredibly valuable tool in leading your team and growing your startup. When used correctly, it comes with plenty of benefits and has major implications for the effectiveness of your reporting and the success of your team.
What is Data-Driven Leadership?
Data-driven leadership is an excellent approach for startups. As a leader, it’s your job to incorporate your customers, team members, and concrete facts about your business into every decision you make. With the help of the data you collect on a regular basis, you can bring your customers to your team and use it to make growth-minded decisions.
Benefits of Being a Data-Driven Leader
Much like a leader without purpose, data without context is useless. Similarly, making decisions for your business without solid evidence to support isn’t going to get you very far. As a data-driven leader, you will be able to include analytics in your decision-making process, which adds context to your data and provides a point of reference for measuring growth.
By using data, you’ll also be reaping the benefits of connectivity. As mentioned earlier, data helps you connect nearly every aspect of your business, most importantly, it connects your customers to your team. It works to show you exactly how your customers are responding to your business and then brings you the numbers. From there you are able to work with your team to create informed decisions to drive your business forward.
A personal benefit of data-driven leadership is that it makes you more credible. Backing up your actions with concrete examples proves to your team, and yourself, that the decisions you’re making are because the numbers are pointing you in that direction. Once the decision is made, you can rely on the numbers to make adjustments from there on out.
How Data-Driven Leadership Affects Reporting
Most of the decisions you make will have a lot to do with your reports. Because your data directly affects your reports (and how quickly you grow) you can be sure what you are using is accurate. Here are a few reports you likely use and how you can use data to drive them.
- Cash flow: As you probably know, cash flow is one of the most important reports for your business. As a leader, you should always be actively trying to improve your cash flow. When you use data, you and your team can strategize to find the most effective ways to improve.
- Forecasts: Forecasts are an essential factor in growth. With accurate data, your team can create forecasts that will help you get from where you are now to where you want to be.
- Budgets and Expenses: Using data to analyze your budgets and expenses will help your team create a plan for growth. It will give you definitive answers as to how you are doing and where you can improve.
3 Tips for Being a Data-Driven Leader
1. Lead by example
It’s clear data can play an essential role in your leadership, if you let it. You can guide your team to growth but you have to take the first step. As a leader, your coworkers will turn to you and follow your example, so if data is what will get you from where you are to where you want to be, start implementing data-driven decision-making into your workplace.
2. Understand the metrics so you can explain them to your team
Without a clear understanding, data won’t be helpful. Before you present a data-driven plan to your team, be sure you fully understand how your data will be used and in what ways it will affect your business. From there you’ll be able to explain to your team why it matters.
3. Define the goals for your data
You and your team need a clear understanding of what you hope to accomplish with your data. Set goals and refer back to the data every chance you get. It will help you stay focused and you will begin to see the shift in the numbers you are hoping for.
Work with an Experienced Accounting Partner
Your data tells the story of your business. It shows you information about nearly every aspect and can play a huge role in making decisions that help you grow.
Along with soundly-backed decisions, data connects your customers to you and your team and builds credibility. With data-driven leadership, you’ll also see much-needed improvements in your reports. Leading by example, understanding the metrics, and defining your goals is essential, however, working with an experienced accounting partner will help you get the most out of your data.
An experienced accounting partner, like Pasquesi Partners, will work with you to improve all areas of your business through accurate data. They will help you track the right metrics and better understand them so you can be an informed, data-driven leader.