Analyze Your Data

There is so much data around us that it is easy to forget that the keys to understanding and maximizing our businesses are contained in that data.

You are surrounded by information coming to you about your business. The phone rings, the fax buzzes, the e-mails keep dinging in your in-box, your machines are logging cycles, your quality team is logging defect rates and the financial folks are assembling profit and loss statements. You have mounds of data about your business. Mae West once said, “Too much of a good thing can be wonderful,” but she probably never owned a machine shop. There is so much data around us that it is easy to forget that the keys to understanding and maximizing our businesses are contained in that data.

Obviously, the first step is to collect the data and build the models to correlate and analyze it. It will be some work getting it set up, but once the spreadsheet model is built, maintaining it and adding new data at the end of every day, week or month is fast and easy. Shop owners need to see where their business is headed, and the best way to do that is to understand past and current performance. Every dimension of a business should be measured just as a precision part should be measured. What are the critical dimensions of your business? As a good entrepreneur, you will not always respond to what the data is telling you, but it will help you make decisions.

The first area to review is customer relationships—they are the lifeblood of a business. Determine which customers are the most valuable and profitable. Do some customers deserve to be “fired” because they only allow you to break even or worse yet, you are losing money doing work for them? Is there a pattern to the type of parts you can make the most profit on? Which customers are paying on time? Which ones have you been able to get more business from? Which ones have become a bit of a “customer service nightmare”? Build an ideal customer profile, and go after these customers.

The next area to review is employee performance. Whether you have a staff of one, 100, or 1,000, it is always critical to know how productive they are and how much they are contributing to the bottom line. Often, we rely on our gut instinct to weed out the lesser performers, but if you dig into the real data, it is easier to make those determinations. An employee’s cost can be correlated relative to the revenue generated from the work that employee produced. Figure out which employees are your profit producers and treat them well. Then, encourage under-performing employees to go to work for your competitor.

Everything that is related to production on the shop floor needs to be objectively reviewed as well. From CNC machines to CAD/CAM software, business investments will diminish in value if you don’t have a grasp on how they are performing. How can you save time and resources by keeping your machines at capacity? What types of jobs are your machines most prepared to handle? All business tools need to be calibrated for efficiency. Determining the best strategy for using machines will go a long way in predicting the long-term health of a business.

Information is a powerful tool, but left unanalyzed, it becomes a useless stack of numbers. Take the time to truly understand and analyze the data in and around your business. When you are able to measure your success, you have a greater chance of repeating it.

Mitch Free is president and CEO of, Atlanta, Georgia. He can be reached at (770) 444-9686, ext. 2946 or at