Record-keeping systems play an essential role in allowing your business to function. Without effective record keeping you might miss important deadlines; provide inadequate training and information to production crews, which leads to dissatisfied clients; or fail to properly invoice, which results in poor cash flow.
Your record-keeping system takes in and stores data, allowing you to process it into useful information that shapes business decisions. Knowing what data to collect and how to store it for reference and retrieval can be challenging, particularly when your needs constantly change. Making minor changes can happen as you go along, but significant overhauls to a particular process may have larger implications across your business, making implementation of significant changes more challenging.
Data and information are often used interchangeably but are not synonymous, and understanding this will help you improve your record-keeping system.
Data is basically facts that have not been processed, interpreted or dealt with. Think of data like the pieces of a jigsaw puzzle. You may have an idea of what you’re looking at, but without a picture of the final product, the jigsaw piece is of little value.
Data can be quantitative or qualitative. Quantitative data can be observed and measured, like inches of snowfall, temperature and time required to complete a defined task. Qualitative data can be observed, but not measured, such as the appearance of a finished parking lot or reduced visibility from blustery conditions.
The amount of data that can be collected is relatively endless, so knowing what types of data are important to collect and what else is just clutter is important to determine.
Information is knowledge gained through the processing or interpretation of data; it is the completed jigsaw puzzle.
By itself, data is disorganized and has little to no meaning. Once data is processed, it takes on context and structure and becomes useful. Information provides you with a snapshot picture of a point in time based on the facts that are used. Because data is constantly being added, your information will change accordingly. While data is fact-driven, information derived from those facts may be flawed or inaccurate if data is missing or misinterpreted. You can’t put the puzzle together without all of the pieces.
For example, when you process payroll you need a system that collects hours worked. This data is processed to create payroll checks - and if you’re missing hours or have inaccurate hours, employee paychecks will be wrong. This same data can be used when job costing your clients’ sites or a storm event to determine profitability. The information that allows you to either complete an action or make a decision about production efficiency is all based on the data you collect.
The expression “garbage in, garbage out” reflects the challenge of accurately collecting and recording data. Because people are involved in recording or handling the data, it can be spoiled or altered. The more data you try to collect and the more complicated the system, the greater the likelihood for error.
Too much, too little?
Finding the right balance between collecting too much or too little data is a constant dilemma. If your business is growing or is feeling out of control, you may try to impose processes or systems to create more order so that you can keep tabs on all the moving parts. However, implementing too many systems or overly defined processes may result in collecting too much data, which can be overwhelming. Avoid the temptation to collect data for the sake of gathering more data. If you won’t use it, then you most likely don’t need it.
Keep your process as simple as you can to minimize the potential for error, yet realize that as your company grows, the amount of data and the way you collect it will change.
Looking at our payroll scenario:
- If you have one or two employees, it may make sense to keep a simple journal for payroll hours.
- As you add employees and you can’t be present to personally record payroll hours, you may need to create route sheets and rely on them to track their own payroll hours.
- Employees will sometimes forget to accurately log their hours, so if this becomes a problem or you continue to add to your workforce, you may need a time clock or other data collector to improve accuracy.
Changing your systems
External forces may require you to change your record-keeping system. For example, a vendor may require certain data when you provide service reports. If you don’t already collect that data, you will need to adjust your processes to meet their information reporting requirements.
Internally, changing processes can help improve your data collection (and the resulting information you glean from it). For example, your crews may be reporting their work, but reading their route sheets may make it difficult to determine exactly what was done on the site. This makes it challenging to interpret what work was completed. Improving your data collection points, either via a more refined route sheet or app that records the necessary data, will provide more order to your data and make it easier to process.
Improving your record-keeping system will help bring order to your business, which will directly impact your bottom line. Start with the areas of your business that are the source of your largest frustrations and examine where changes will make the greatest return on your investment in time. Identify what information you need and what data must be collected to make it possible. Working through your process from start to finish may identify areas where some basic tweaks in data collection will allow you to generate more useful and accurate information. Better information will allow you to shoot less from the hip and make better decisions that you can trust.
Douglas Freer, CSP, owns Blue Moose Snow in Cleveland. Contact him at