Laying the Groundwork: Analytics and Startups

Analytics might sound like a challenging activity for a startup organization. After all, if you are just commencing operations, there is not a lot of data that you have access to for review. Shouldn’t there be more important things to be worried about than, say, creating positions for analysts? After all, if you do not get your business going, you might close your doors before you have been in business for a year.

Yes, these are legitimate issues. In addition, I would definitely concur that you do not want to have an analyst as your first hire (or even second, third or fourth). This is because you simply do not have the data necessary to make their role a meaningful one. Additionally, there is a good chance that someone on your Startup team might have the analytical knowledge and expertise to actually handle the process of getting your analytics into place.

With that having been said, there is some important preliminary work to handle first. That big arena is in the data collection process itself. How are you going to collect data that will then be analyzed? Do you have a CRM platform? Also, do you have a way of creating digital reports that can be safely stored somewhere for people to review when necessary? Paper reports are significantly limited (one can view them at a time), and after a while, they begin to clutter things up significantly. Additionally, do you have the tools that will make analytics easy? Thankfully, any spreadsheet will do, but if it is not on the cloud in some capacity, then you are back to the issues with the paper reports.

Therefore, consider a means of reporting that is digital, as well as is cloud based. This will be especially helpful, since it means that people who are working in a remote or hybrid setting will have little to no difficulty accessing what they need in order to accomplish their tasks. If you are not able to code (or you do not have a developer you can contract to create an app for your business), programs such as AppSheet enable you to create an app as long as you have a spreadsheet with a cloud account (such as Google Workspace or Microsoft).

Once you have developed the necessary reports, focus on data collection. Initially, save everything, since there is a chance that you will need something that you didn’t think was crucial. Additionally, prepare for the likelihood that you will eventually need to add new reports, especially if it comes to light that you need a piece of information to help clarify your current set of reports.

How long should it be before you consider bringing on an analyst? There really is nothing set in stone. Pay is important to consider, because if you can’t afford an analyst, there is obviously no point in hiring them for your team. Additionally, you really need at a minimum a full year's worth of data first, especially if your company calendar has busy and slow seasons. That way, you can get a full slate of data.

Personally, I would wait until the company is at least three years old to hire an analyst. That is because at this time, you will have three years worth of data for each quarter. The company should have some stability to it, and trends will be starting to emerge. These trends will be helpful for you, since an analyst will be able to look closely at the data and tell you things that should be done with this knowledge.

Never underestimate the ability of an analyst to help shed major light on things that your company can and should do. Not only will they be able to identify trends, but their work will possibly go a long way in developing effective models that would project what type of income you can see in the coming quarter (most likely with a margin of error, hopefully between 3-5%). In short, an analyst has the ability to help your company to grow quickly, setting the stage for Scaling.