Trend Analysis
Pre-Talk
1)Do you track data/results at work?
2)Do you review the data from time to time?
3)Is the data worth your time to review?
PictureTalk
1)Describe what is the above picture is trying to represent.
2)Do you agree with the attitude represented above?
3)Can we trust data that is presented out there in the world?
Article Highlights
Sourced from
Trend analysis is the process of comparing business data over time to identify any consistent results or trends. You can then develop a strategy to respond to these trends in line with your business goals.
Trend analysis helps you understand how your business has performed and predict where current business operations and practices will take you. Done well, it will give you ideas about how you might change things to move your business in the right direction.
You can use trend analysis to help improve your business by:
- identifying areas where your business is performing well so you can duplicate success
- identifying areas where your business is underperforming
- providing evidence to inform your decision making.
This guide explains how you can use historical data to analyze trends and improve your business.
Developing a trend analysis system
By monitoring your business's performance over an extended period of time, you can establish useful information on trends. You can then use this data to refine your business decisions and strategies.
Set up an effective trend analysis system by:
- preparing for analysis- determine what performance data or results you are going to examine and compare
- applying a threshold- define the level at which a variation is worth noting. For example, a 10% increase or decrease in sales over a period of time should be investigated for causes. Use your discretion as you know your business best
- conducting cause analysis- investigate why the variation occurred so you can use this information for future planning and decision making.
To make sure your analysis is meaningful, put a record keeping system and process in place to record accurate information. Communicate a set of procedures that both you and your staff understand.
Make sure the business data is collected, recorded, reported and evaluated quickly and efficiently by:
- keeping accurate business records- including financial information, staff hours, stock (in or out) and marketing campaigns
- analyzing trends at critical decision points- for example, potential cash flow issues, staffing, peak sales periods and the success of marketing campaigns
- collecting information on a regular basis- with the frequency determined by the type of data you are collecting
- maintaining data integrity- by agreeing on definitions of what is included or excluded from a particular count; for example, including sales of new season stock and not old season stock for the duration of a marketing campaign
- storing information in a useable format- for example, using spreadsheets or accounting software
- encouraging team participation- by promoting what you are doing to the people who collect and record your data.
Benchmarkingis a way of measuring your performance against similar-sized businesses in your industry. You can benchmark almost all the areas of your business that are important to your success.
Keep in mind there are situations when trend analysis is of limited use. Examples include:
- if conditions change dramatically, historical data may not apply
- comparing data on an annual basis may not always accurately represent business performance, since other factors may influence results
- data collected over an extended period of time does not allow adjustments for inflation.
Discussion
- What is trend analysis?
- Why should we use trend analysis?
- Do you use trend analysis at work or at home?
- Do you shift course when you see a trend? Should we?
- How do you deal with too much data?
- Do you have a think tank team to review big data?
- How long do you keep your data for?
- Do you change your data points (your focus) from time to time? Should we?