Analyzing Data is Crucial For the Success of Startups. Here’s Why.

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Running your startup based on gut feel alone is a bad idea. A bad idea.

If that’s how you approach management decisions, you’ll end up misjudging certain aspects of your business. You might view liabilities to be assets, or business traps as areas of opportunity that you should leverage.

That is why, if you want to reduce your chances of making erroneous assumptions about your startup, you need to leverage the power of data. By always analyzing data, you’ll have a clearer and more accurate perception of how your business is doing.

In this guide, we’re going to look at several reasons why you should pay more attention to your data and why you should invest in analyzing it.

Uncover gaps and opportunities.

Here’s a question for you. Would you employ the help of Contractor A if you knew that nine out of the ten tasks that you send them lead to total failure?

Here’s another one. If you knew that Contractor B is consistent with producing exceptional results, would you still give Contractor A and Contractor B the same amount of workload? Or would you work with Contractor B more?

You’d choose the latter, wouldn’t you? It’s the logical and smart choice to make, after all.

When you analyze your business data, you can determine which among your contractors, tools, workflows, strategies, processes or even team members are bringing you meaningful results. This also tells you which ones are becoming liabilities.

For example, if you’re running a multichannel marketing campaign, you can tell through data analysis which channels are bringing in the most traffic. This information should be readily available in your Google Analytics reports if you’re using email marketing software like Mailchimp, powerful on-page social sharing tools like Sumo’s Share buttons, or any other solution that allows you to append tracking parameters to links.

Analyzing Data is Crucial For the Success of Startups. Here's Why.

With the right data signals being fed to the right analysis platforms, you can also tell how qualified or warm the website traffic is that the platforms are sending your way, and what percentage of these visits is converting into paying customers.

Armed with these insights, you can remove (or improve) the parts of your business that are performing poorly, and you can allocate more resources to the parts that are yielding you great outcomes.

As a result, you’ll end up optimizing how you allocate your resources, allowing you to avoid investing in platforms and processes that aren’t really adding value to your business.

Better forecasting and levels of preparedness.

It pays to know beforehand if there’s going to be an uptick, or a decline, in key areas of your business, including sales, supply chain, and available talent.

After all, given enough time, you’d be able to make the necessary adjustments to further leverage your upcoming opportunities, or drastically reduce the damage of the downturn that you’re about to face. But it’s the “given enough time” aspect that makes the difference – with the right predictive analysis model, information and workflows in place, you can maximize your lead time on these adjustments.

And if your competitors aren’t as keen on analyzing their data, they’ll have an inferior grasp of the trend that’s about to hit them. They may have some sense of when things will start to pick up or decline, but as far as how much of a decline or spike they’re going to sustain, their estimates often fall far below the mark.

This leads to missed opportunities. Or worse, it leads to catastrophic scenarios where the company fails to weather the proverbial storm that they’re facing, causing them to close up shop.

Analyzing your business data allows you to forecast business or industry trends — with a high level of accuracy, at that — enabling you to run your business more effectively. If you’re running an ecommerce business, for example, you can use Google Trends to determine whether the trend of the type of product you’re selling is growing or if people are losing interest over it.

Analyzing Data is Crucial For the Success of Startups. Here's Why.

As you can see from the data above that we’ve garnered from Google Trends, there is solid interest in the term “baby rompers.” This tells us that if you were to sell baby rompers, there is still some interest in the product.

It’s worth pointing out, however, that you need to look into other factors aside from audience interest when deciding which ecommerce product to sell. However, at the very least, with the help of Google Trends, you can ascertain whether there is still interest over your product or not.

Optimize your business processes.

With all the processes and workflows that come with running a company, you’re likely hard-pressed to identify the most pressing inefficiencies.

When left unchecked, these inefficiencies could cost you thousands of dollars worth of needless manpower hours, subscription expenses, or costly business decisions that you otherwise would have been able to avoid when equipped with ample data processed into actionable insights.

Analyzing Data is Crucial For the Success of Startups. Here's Why.

By collecting, merging, processing, and arranging your data, you’d be able to spot the most costly inefficiencies in your business processes. You’d be able to see the disconnect between the elements in your workflows, which would then prompt you to investigate more thoroughly and eventually make changes that help make you more profitable.

Fraud prevention.

Efficient data and analytics capabilities can even help you to prevent cyberattacks. Through security and fraud analytics, your team can uncover security gaps in your IT network.

Running a penetration test, for example, will show you which among your company devices, procedures, or cybersecurity measures (among other things), will likely still fall prey to cyber criminals should they try to target you.

What’s more, these “pen testers” can also propose suggestions to bolster your cybersecurity. The results and recommendations they’ll share are going to be based on the data that they acquire and process.

For example, if, after running a pen test you realize that the passwords your employees are using to log in to their online accounts aren’t so secure, you can require them to come up with new passwords and check them with PasswordMeter to make sure that the new ones are sufficiently hard to crack.

Analyzing Data is Crucial For the Success of Startups. Here's Why.

By analyzing this data, your team can come up with the best cybersecurity measures to protect your company against cybercriminals.


For a lot of startups and even established companies, data analysis is a treasure trove of opportunities that can take you to the next level. If you haven’t started leveraging your data, then you need to start analyzing them now so you can reap the game-changing benefits of data analysis.

The more you collect, process, and analyze your data, the better you’ll be at running your company.



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