How Bad Data Can Quickly Lead to Bad Business Decisions

Most entrepreneurs understand that data informs important business decisions. But some entrepreneurs find themselves in a world of trouble when they misuse or misinterpret their data by mistake. Bad data can lead you down the wrong road faster than you may think!

What Is Bad Data?

Bad data consists of wrong or irrelevant information. But not all bad data is false! It can be true but lacking a key explanation or timeliness to make it work. 

For example, the owner of a lawn care business shouldn’t plan their budget for June around their analytics from March. The workflow is far too different between those two months. 

Similarly, a business owner who wants to bounce back from a sudden, long-term dip in the market should consider the future demands in their field. Long-term adjustments may indicate that data from the prior year is totally useless!

The only way to be sure that your data is “good” is to think carefully before you use it. Where did the data come from? What caused it to fluctuate? Always keep your eyes and your mind open to the possibility of bad data. 

Related: 5 Data Metrics You Shouldn’t Track and Measure In Your Business (& Why)

Why Is It Important to Watch Out for Bad Data? 

Bad data has become a common pitfall for entrepreneurs as data becomes easier to collect and more necessary to utilize. Today’s business world relies heavily on analytics. But like anything else in life, it makes sense that errors happen occasionally.

It’s important to keep searching for bad data, even when you think your data collection methods are foolproof. Changes in the market or circumstances beyond your control (like tampering or human error) can create misleading results.

Our Measure & Maximize program helps you keep track of your data (and teaches you how to search for the bad stuff). You can design your own personalized data dashboard and gain access to knowledgeable data interpreters to make the most of your business analytics.

How Can Bad Data Impact Your Business Decisions?

Data numbers inform most of the decisions you make as an entrepreneur! If you’re wondering how bad data can steer you down the wrong path, take a look at these five results to watch out for.

Bad Data Translates Into Incorrect Insights and a Bad Strategy

Bad data gives off a bad (or wrong!) impression about your business. Working with inaccurate or outdated metrics often means making poor decisions for your team members and making less money (or more work) for everyone involved.

For instance, leveraging duplicate data is a common mistake for all types of business teams. It’s so easy to bypass the data dates when you’re in a hurry! And the results of such an error can be catastrophic—sometimes suggesting more success than you’re actually experiencing. 

It Wastes Your Resources

Picture offering business-management services to other businesses, but leveraging the most costly software applications. You need an accurate picture of your ROI in order to make more profitable adjustments. You could be making a higher profit with less expensive (or free) management software!

Bad data would not indicate a problem or steer you in the direction of a more profitable business. In the end, you could wind up making the same error one too many times, and find yourself completely out of touch or out of date with your services.

You’ll Miss Out On Important Opportunities

The whole point of leveraging accurate metrics to drive your business is to make the most of every opportunity. 

Notice that your clients love social media? Work with that! Do they check your marketing emails more often in the morning or at night? Plan accordingly. 

Every bit of good data cultivates a golden chance to grow your business.

Without accurate or timely information, you’re bound to miss a lot of green lights:

  • What sort of marketing does your audience interact with?
  • What type of content builds your business?
  • How often do clients click through your blog posts?

Inaccurate metrics on these important subjects (and others exclusive to your niche) paint a completely wrong picture and lead to poor choices.


It Has a Snowball Effect Across Departments

You’re likely using your metrics to make decisions. Those decisions influence what you delegate to your team, where you’re concentrating your efforts, and the day-to-day work that’s happening in your business. 

So if you’re using bad data (without context, duplicated information, or even just inaccurate numbers) there’s going to be a snowball effect. You’ll be focused on the wrong big-picture strategies, delegate tasks to your team incorrectly, and then have to spend time fixing whatever mistakes ensue. 

Even worse, you’re potentially going to be incorrectly evaluating your team members’ efforts. When data tells you a story, it’s worth fact-checking prior to making any big decisions. Otherwise, you risk making a mistake that’s hard to correct.

It Could Damage Your Reputation Among Customers and Lead to Quick Crisis Decisions

It’s important to make sure all of your data is up-to-date and accurate when making decisions about your target audience. Bad data that directly impacts your clients (slow services or ineffective support systems, for example) will make them talk! And bad talk can seriously hurt your reputation. 

Upset clients often turn to social media or your business website to voice their complaints publicly. Word travels fast when consumers are upset on the Internet. You can lessen or eliminate these occasions by watching out for bad data.

Bad data turns up in every business, but will do so less and less once you know what to look out for. Utilizing efficient data systems and checking your analytics regularly will help prevent unforgivable mistakes. 

Sign up for Measure & Maximize to keep closer eyes on your business progress and get the valuable support you need to make your business soar!

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