What Are Business Statistics?

Business statistics empower professionals to accurately assess their data, identify meaningful patterns, and make decisions that direct their companies toward growth and sustainability. You can use different types of business statistics strategically to improve your company operations and yield the desired results.

Jobs involving data analysis are in demand across industries. The US Bureau of Labor Statistics projects faster-than-average growth for many of the jobs that use business statistics. The organization projects 8 percent growth for financial analysts, 10 percent growth for business analysts, and 13 percent growth for market research analysts [1, 2, 3].

What are business statistics?

Business statistics involves the use of statistical methods and analyses to make informed decisions and solve problems in the business world. With business statistics, you might use different analytical methods to collect, analyze, and interpret your data to inform insights on market trends, manage financial data, assess performance within your organization, and inform decision-making based on predictions of the likelihood of different events. By leveraging data and statistical methods, you can make strategic decisions that drive efficiency and innovation within your company.

Types of business statistics

When using statistics within a business context (or any context), you must decide what type of statistical method is right for your application. For example, if you want to inform your supervisor of the average number of sales you made in a year, you might provide them with the mean of your sales, which is a form of descriptive statistics. However, if you wanted to give a projection of your sales next year or over the next five years, you would use predictive statistics. 

Descriptive statistics

Descriptive statistics summarize and organize data to describe its basic features, often through graphs, charts, and numerical measures such as means, medians, and modes. This type of statistics helps businesses understand the current state of operations or market conditions by providing a clear snapshot of collected data, like sales figures or customer demographics. 

You might use this type of data to present current company statistics to stakeholders, such as reporting on investment returns, performance indicators, and current trends in your market space. Descriptive statistics can also show your progress toward your business goals, making them a valuable tool to keep you on track.

Diagnostic statistics

After descriptive statistics, diagnostic statistics can take your analysis one step further to identify why a certain trend or outcome happened. This involves methods like hypothesis testing, exploring variable relationships, and regression analysis. 

With this type of statistics, you answer questions like “Why did our sales increase this month?” You might look for certain changes in your input variables, like appointing a marketing campaign or hiring a new coordinator. You can make more informed decisions by understanding what is driving the metrics you are seeing in your descriptive analysis, 

Predictive statistics

Predictive statistics provide insights about what will likely come next for your business based on historical data. Businesses can forecast upcoming trends, product demand, and potential risks by applying models and algorithms to data patterns. 

You might use this type of statistics for planning or resource allocation, allowing you to anticipate market changes and business needs to stay ahead of competitors. You can do this analysis with regression techniques, such as single linear or multiple regression. These models allow you to assess how different covariates affect predictions, such as accounting for baseline sales or environment characteristics.

Prescriptive statistics

Prescriptive statistics take predictive insights a step further by recommending actions businesses can take to achieve desired outcomes. This includes things like investment decisions, content recommendations, product management insights, and determining what type of marketing is best for different customer segments.

While prescriptive statistics are a powerful tool in business, they don’t replace human judgment and insights. Because of this, you should remember to use prescriptive statistics to help inform your decisions and ensure you consider all relevant information.

Who uses business statistics?

You might use business statistics across various roles and industries, each leveraging data in different ways to enhance decision-making and strategy.

• Business analysts use statistics to interpret data and assess processes, providing actionable insights about company requirements and recommendations.

• Market researchers rely on statistical analysis to understand market trends, provide insight into customer behavior and trends, and inform future efforts to improve outcomes.

• Financial analysts use statistics to assess investment opportunities, forecast trends, and manage risks.

• Operations managers apply statistics to optimize production processes and improve quality, increasing operational efficiency.

Pros and cons of using business statistics

Business statistics are a powerful tool in many ways, but understanding the advantages and limitations is important to have a comprehensive view of how to benefit from different measures effectively. Pros and cons to keep in mind include:

Pros

• Evidence-based decision-making: Business statistics can help you choose based on actual data rather than intuition alone.

• Insight into business performance: By paying attention to metrics and analysis results, you can keep a clearer view of how your business is performing, staying aware of strengths and areas for improvement.

• Reliable data for planning: With accurate statistical analysis, you can rely on your data to predict future trends, plan strategies, and allocate resources efficiently.

• Predict outcomes: You can use business statistics to anticipate the outcomes of certain actions, helping guide your decision-making.

Cons

• Misinterpretation: Correctly performing data analysis is essential for understanding it and drawing accurate conclusions. Misinterpretation of data can lead to potentially costly decisions.

• Over-reliance on data: Solely depending on statistical analysis might overlook qualitative factors (like customer satisfaction or employee morale) because the model might not capture these metrics. 

How to start learning business statistics

You can start learning business statistics by building your foundation in statistical methods, which can then be applied to the context of your choice, such as business and marketing. To learn statistics, consider these steps:

• Learn foundational concepts: Start with understanding basic statistical concepts, such as descriptive statistics, hypothesis testing, and prediction algorithms. 

• Pursue a degree in statistics or business analytics: If you are looking at formal study, consider enrolling in a degree program focusing on areas you want to learn. These programs provide comprehensive training in analyzing and interpreting different types of data.

• Complete online courses: If you want a more casual way to build statistical knowledge than a formal degree, online courses are a great option. You can take courses at different levels offered by industry leaders and academic professionals, helping you tailor your learning to the areas that matter most to you.

Getting started with Coursera

Business statistics are a valuable tool used to understand a company's current situation and make decisions to improve operations, customer relationships, and more. You can enhance your knowledge of business statistics by taking a series of courses on the Coursera learning platform. The Business Statistics and Analysis Specialization is a five-course series designed to guide you through introductory data analysis all the way through to a business statistics capstone project so you can gain practice on real-world data sets.