Demystifying responsible data use: What do small business owners need to know now? 

Over the last two years, the world of small business has become more digitally connected than ever. From the way we engage with customers or clients to the apps that help us market, track, sell and distribute goods and services, technology has – for most Australians – become the bedrock of how we do business, writes Samuel Burmeister, owner of Tall Books and member of the Xero Responsible Data Use Advisory Council

And behind every one of our digital interactions is a powerful currency known as data. So why is it, then, that many of us know so little about it?

As an advisor to small business owners (and as one myself), data is a topic that’s shrouded in myth for most of our community. In a survey of over 2,500 small businesses globally, Xero found that only 39 per cent of Australian respondents claimed to understand what tech providers do with their data beyond delivering services and products. Yet, despite the massive knowledge gap, this finding represents an equally significant opportunity to educate and inform Australians about safe data sharing, and how it can be used for good. So when I was invited to join Xero’s Responsible Data Use Advisory Council when it launched in July of this year, I set out to do exactly that. 

Through our shared experience, the council is working to further the conversation and play an active role in providing small businesses with the resources to better understand responsible data use. And that starts with answering some big questions.

What exactly is data? 

In its simplest form, data is the collection of statistics or facts. However, alongside the rise of technology throughout history, the way businesses, governments, and even individuals collect and extract information from data has shifted significantly. And as a result, most Australians have fallen out of step with what classifies as data.

Every time you share your personal or business information online, you contribute to a kind of digital fingerprint where data constitutes the DNA. This can be used for all kinds of purposes. For example, a tech provider could draw insights from your ‘fingerprint’ to develop improved products and services that suit your preferences. Whereas a small business owner could use their own data to calculate their future cash flow position. And when combined with millions of others’ unique impressions, enormous data sets can be accumulated and digitally analysed (commonly referred to as ‘big data’). But the problem is, there’s a lack of understanding about how this ‘data DNA’ is collected and used, raising more questions than answers for most people. 

So tell me, how do I know what tech providers are doing with my information? 

Tech providers use customer data in many ways, which are often outlined in their terms and conditions (Ts & Cs). So when you create an account or sign-up for a subscription, you’re asked to accept their Ts & Cs. These usually contain more details about a company’s responsible data use practices, including how they’ll use your information. But the problem is: do we actually read the fine print? If you answered no, you’re not alone. 

In Xero’s survey, four in five (78 per cent) of small business owners admitted they don’t read Ts & Cs. And it’s easy to understand why, with nearly two-thirds (60 per cent) of those who do claiming to have trouble understanding some or all of the information that’s shared within them. This indicates that small businesses need more support when it comes to data literacy. What’s more, tech providers need to share their responsible data use practices in more digestible ways. 

How can I ensure my privacy? 

In Australia, responsible data use is protected under the Privacy Act. This means that any company (or individual) that collects, uses, stores, and discloses your personal information is subject to strict laws in order to keep it safe. And if a company experiences a data breach, they are legally obliged to inform any individuals whose personal information has been compromised. 

So why should I share my info, and can it be used for good? 

The collective power of data is enormous, and when used responsibly, its potential to do good is equally significant. But historically, only the world’s largest and most complex organisations could access and benefit from it. Nowadays, that’s a different story. Tech providers and government agencies have democratised safe data sharing with anonymised and aggregated systems, and many of them are choosing to transform it into insights and tools that benefit small businesses. 

One of my favourite examples of this is Xero’s Boss Insights report, created in partnership with Bernard Salt of The Demographics Group. By leveraging publicly available data from the Australian Bureau of Statistics (ABS) annual report called Business Count, the most recent Boss Insights paper examines the pandemic’s impact on Australia’s business economy. Bernard breaks down the ABS data into consumable takeaways, while Xero provides real-world small business examples to make the findings relatable to readers. As a result, the “dry and dusty” Business Count data – as Bernard classifies it – becomes accessible and valuable to everyone from industry leaders and policymakers to entrepreneurs and advisors. All so we can help small businesses to recover and rebuild from the pandemic, using these insights as a guide for which industries and small business segments (e.g. sole traders, micro businesses, startups) need our support. 

How can I responsibly leverage customer data? 

There are many ways that you, as a small business owner, can harness the power of customer data easily and safely. For example, a great use case is creating an eDM campaign to build relationships with new clients or win repeat business with existing ones. 

The first step in leveraging customer data is gaining consent to use it, which – in the case of an eDM – could start with a question like: would you like to sign up to our newsletter? This could be included in your email signature (for service-based businesses) or through a pop-up at the checkout (for product-based businesses). To keep things simple, only record the information you need, such as an email address and first name in this example. Look to platforms like Hubspot to help you create an eDM mailing list and uncover other customer relationship management (CRM) strategies. 

Although we’ve only just scratched the surface of responsible data use with these questions, it’s an important topic for every small business owner to recognise. And while we may not have all of the answers – or even the language to ask the right questions – just yet, initiatives like Xero’s council are giving small businesses a seat at the table when it comes to how data is understood and used in the future. Because after all, the more we know about it, the better we can work together to harness and maximise its power for the greater good of our community. 

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