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  September 7th, 2016 | Written by

Data-Led Small Businesses Do Better Than Data-Shy Companies

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  • Exact’s report examines impact of technology on distributors and manufacturers.
  • Data is instrumental in helping businesses make smarter decisions.
  • Businesses that don’t use data fall behind their peers.

Small businesses that use data to help make decisions are more strongly growing revenue than their counterparts who use data on a limited basis, according to new research from Exact and Pb7.

The findings show that businesses across the U.S. and Europe who lean on data insights reported revenue growth of 21 percent in the last financial year, as compared to nine percent for businesses reporting limited use of data. Data-led businesses also experienced a net profit margin of 22 percent, versus 14 percent achieved by small businesses in which data has a limited role.

These findings are detailed in a new report released today from Exact, a global frontrunner in business software in the cloud for small- and medium-sized businesses. The company’s second annual global research report, “Small Business Barometer 2016,” examines the business and industry challenges that small wholesale distributors, manufacturers, accountants, and professional services firms face on a daily basis, and to what extent they are using technology to combat these hurdles. Pb7 surveyed small businesses in the U.S., Belgium, France, Germany, the Netherlands, Spain and the U.K. to create the report.

“Our new global research underscores what we already have seen among our customer base—that data plays an instrumental role in helping businesses make smarter decisions,” said Logan Paquin, director of product management at Exact. “Those that don’t take advantage of the wealth of insights data can provide are falling behind their peers. Small businesses need to pull out all the stops now in order to evolve their business strategies, differentiate from competitors and truly optimize their business models. We’ve seen that technology that automates processes and provides real-time data insights can help on all fronts.”

Fifty-seven percent of U.S. small businesses are finding themselves up against new digital competitors, according to the report. In the face of strong competitive pressure, 21 percent of those surveyed in the U.S. anticipate being out of business in five years if they don’t radically change their business models, yet only two percent are currently taking steps to make radical changes.

The report also found that only 12 percent of small businesses are using new technology to hold on to market share with 24 percent turning to delivering more customer value to compete.

Small manufacturers in the U.S. had the lowest percentage of on time deliveries (72 percent) as compared to their peers abroad. The impact of delayed orders in the U.S. is significant: 25 percent of customers don’t come back when a delivery is late.

Cost control, cost reduction, and finding new customers were the top three business challenges cited by manufacturers this year. Within the manufacturing industry, respondents named product development and innovation, insights into costs of materials and processing and efficient inventory management as the top three challenges. Over half of manufacturers feel that better insight into prices for materials from suppliers would help them gain control over costs of materials and processing. Fifty-six percent of small manufacturers anticipate the market evolving toward more orders, delivered faster and in smaller series.

With their position on the supply chain increasingly being threatened, wholesale distributors named competition from suppliers through direct sales channels as their number one industry challenge. Pressure on prices due to online competition was the second top industry challenge named by respondents.

Despite competitive pressures, the number one way that wholesalers are trying to improve their margins is by working hard and selling more, followed by increasing prices. Just four percent of respondents are currently looking to purchase software to optimize internal processes as a strategy for improving margins, down from last year’s 12 percent. One-third of wholesalers named on-time delivery as a key industry challenge. Ten percent blamed inaccurate insight into stock for delayed delivery times.