5 Ways Data Problems Can Hurt Your Business
As you’re probably aware, utilizing data has become a common and valuable practice in a variety of industries today. From using data to discover public health issues to using it to gain more insight into consumers, data has opened many doors that were previously inaccessible to most business owners.
Unfortunately, while data can be useful in some contexts, it isn’t always perfect, and certain challenges can arise from its use. Understanding the ways that data can harm your organization’s operations can help you avoid certain obstacles and keep your business thriving.
Here are five ways data problems can hurt your business.
The Possibility of Cyberattacks
Though data can be an incredibly powerful tool when it comes to growing your business, it can also put a target on your business’s back. Cybercriminals have proliferated over the past decade and are constantly on the search for networks that they can breach to gain access to confidential data.
The significant threat of cyber criminals in today’s technologically advanced world highlights the need for you to invest in robust cybersecurity systems if you intend to utilize data. Without strong defenses, your data is vulnerable to cyberattacks and being stolen or held for ransom.
Thankfully, you don’t have to know any programming languages or be a cybersecurity expert to safeguard your business. There is a multitude of cybersecurity resources at your disposal today. By taking critical cybersecurity measures, you can bolster your data’s security and improve your business’s chances of being digitally protected.
Issues with Data Quality and Accuracy
When it comes to making important decisions, analyzing data can be a powerful way to reduce risk and increase your chances of finding success. Sadly, this process can have the opposite effect and result in disaster if you’re using poor-quality data that turns out to be inaccurate.
In cases where insights are gleaned from the interpretation of data, faulty data can result in inaccurate insights. This means that you may make significant business decisions based on faulty facts, which can possibly result in negative results.
For example, imagine you take advantage of a public data set to determine which product your business should offer next. Insights gleaned from analyzing the data sets show that towels are in-demand and can be profitable. However, without realizing it, you’re using a data set from a beach town while you are located in the Midwest. This can result in your business losing money and having a surplus of inventory that you can’t sell.
Given the tremendous importance of data quality, your business should strive to be stringent in its data preparation process. Without doing substantial data preparation, the analysis of data may be faulty and cause your business to fail in a variety of ways.
The Curse of Too Much Data
While it’s amazing that data of all kinds have become more accessible than ever before, it can sometimes make data analysis processes more complicated. This is because the vast amount of data available to you can sometimes make it difficult to distinguish which are most useful for your particular business.
Thankfully, there are ways to lessen the overwhelm that can come from an abundance of data and help make it easier to avoid analyst paralysis. To start, it can be helpful to have specific goals that you hope to achieve with the help of data before beginning the data collection process.
Once you’ve determined what your goals are, it will be easier to choose data sets that lend themselves well to your particular vision. As such, being very particular about which data sets you to utilize for different goals can make taking advantage of large data sets more approachable.
Loss of Trust from Data Breaches
For most businesses, brand loyalty and the trust of consumers are vital parts of finding success. Unfortunately, for businesses that utilize customer data, this could potentially result in a severe loss of trust in the event of a data breach.
If your business’s security is breached, hackers could potentially gain access to the private information of all of the customers in your database. This could cause them to develop feelings of distrust toward your business and instead switch over to another brand that provides similar products or services.
For example, imagine that your database is hacked. Cybercriminals then gain access to the credit card information of their customers and use them to make large purchases. Your customers would now feel like buying from your online store is a risk and may never make a purchase from your business again.
To avoid a breach of this kind, it’s important to ensure that all databases containing private customer information — especially financial information — are kept as secure as possible. By putting an emphasis on keeping this data safe, you could potentially avoid a huge loss in customers in the case of your business being hacked.
The High Cost of Utilizing Large Amounts of Data
Though data has become far more accessible to all business owners in the past several years, this doesn’t necessarily mean that it is always cheap to take advantage of it. Analyzing data effectively to glean insights that can have a significant effect on your business typically requires specialized knowledge and a decent amount of time.
If your business is small to mid-sized, hiring a data analyst could be a large cost that actually takes revenue away from your business. This being the case, it’s vital to determine if the cost of doing thorough and consistent data analysis is worth it for your business before engaging in the practice.
However, there are some ways to mitigate the costs of effective data analysis. Taking advantage of some key software and learning to use them can streamline the process and allow you to do data analysis yourself. In addition, some data analysts work on a contract basis and may be more affordable for your business to utilize.
Business Owners Must Be Careful with Data
Data is a powerful tool for business owners to utilize in many ways. However, it can also come with its fair share of risks. From losing customer trust to producing inaccurate insights, there are some significant downsides that can come from utilizing data in your business. Fortunately, these can be avoided by being aware of how to use data safely and effectively. By engaging in key practices, you can ensure that you are using data responsibly and mitigating the chance of it harming your business.