While most small and medium-sized businesses in the UK are trying to use data to inform decision-making processes, many still struggle to turn that insight into action, according to research from data-science consultancy Peak Indicators.
Peak Indicators’ study, which was conducted by researchers at Opinium, found that two-thirds (65 percent) of small businesses currently consider data when making most decisions, putting them on a par with large companies and ahead of other sizes of organisation. However, small business leaders subsequently ignore this insight favouring their intuition in almost one in every two cases.
Despite being less likely than their larger counterparts to use analytical tools to interpret data at their disposal, the use of evidence to support decisions by small businesses was significantly better than at medium-sized organisations. Half (47 percent) of companies employing 51 – 250 people rely solely on gut feel when making decisions, and a further 28 percent frequently override what data they do have available to them.
Micro-businesses perform worst of all in the use of data to support decision making. More than two-thirds (69 percent) of 2 – 10 person firms said they still rely exclusively on leaders’ hunches to inform decisions in their organisations.
Kenneth Neilson, Managing Director at Peak Indicators, comments: “There is a data-divide at the heart of the UK’s business community. Many companies are making progress towards being data-driven, and it is encouraging that small businesses are leading this charge, but much more needs to be done.”
“Poor data practices among medium-sized businesses are particularly concerning. They are less agile and have more to lose than their smaller counterparts, yet many are flying blind in the face of market uncertainty and disruption and risk being left behind by more agile competitors.
“Most small businesses are doing the right thing and consulting data when making decisions, but their limited datasets make it difficult to translate that insight into action. It is easier for leaders to be across the detail of what’s happening to small businesses, so they can rely more on human intuition for decisions. We’d encourage them to build up their data assets systematically as they grow so they can base more decisions on evidence in the future.”