Going into business for yourself is, without doubt, one of the most electrifying experiences. Yet as your business starts to grow, that excitement might be dampened by the harsh reality of just how overwhelming it can be to try to manage every aspect of your business. 

At the very beginning of this process, it’s likely that things will be small and manageable. Chances are you are going to use Excel to manage things like financials, inventory, orders, customer information, etc. Since there will probably just be one person running the business, it’s highly likely that you will have just one master file, with sheets for each of these parts of the business. 

Files like this Excel master document are called flat files. They are simple to work with: you enter the data manually and have the ability to easily analyze all the data. However, flat files do come with some strings. For one, they are prone to human error. If you misplace just one letter in something you enter, flat files will recognize it as an entirely new category. They are also inefficient: if you want to update a piece of information, you have to manually change it everywhere it appears in the file. If you miss an area that needs updating, your data will be inaccurate in some places, which will cause more errors and confusion. 

As a nascent small business, a flat file will be enough to get started and get organized. But as your business starts to grow—and it will!—you might have to start considering alternatives. Relational databases are the next step up from flat files. In relational databases, once a change is made to one field, it is automatically made to every other instance of that field appearing in the database, wherever it might be. This is because a relational database links to other sources of data and organizes the data by creating relationships between them, all behind the scenes. However, relational databases have their own drawbacks: they are costly, necessitate more skills and training, and require extra tools to access the data.

But let’s not get ahead of ourselves! As a new business owner, you have enough on your plate. For now, open up a crisp, clean Excel spreadsheet and start plugging carefully away. There’s no question that this file will set the stage for a well-rounded relational database in the future. And your future is not flat!

LET’S CHAT

When you started your business, how did you manage your data? At what point did you move from flat file to relational database?