Statistics is the branch of mathematics used to collect, analyze, interpret, and present data. It is used by business owners to make calculated decisions regarding the future of their companies. Types of Statistics There are two types of statistics. Descriptive statistics deal with describing a set of data elements graphically. This type of statistic does not make any sort of prediction, but rather shows bullet point type data. An example of descriptive statistics would be a plot line graph that reflects the United States population by year for the last ten years.
A person looking at this data would easily be able to determine how the population has increased or decreased in the past decade. The data would be insufficient however to determine what the population will be ten years from now. The second type of statistics is Inferential statistics. Inferential statistics uses a sampling of information to infer a future outcome. This is often referred to as the ‘best guess’ method of statistics.
This type of information is what is used by businesses in particular to make educated decisions for future planning.
Levels of Statistics There are also many levels of statistics. Nominal level statistics portray objects by name or by a label. Ordinal level statistics has ordered data such as by number or by letter. Interval level statistics has data ordered by the differences or intervals between the data. An example would be a thermometer labeled in degrees Celsius. These are all useful ways to organize data, but the more reliable and widely used level is Ratio level statistics.
In ratio statistics there is a natural zero starting point. This one fact gives the intervals between data actual meaning. A person can actually compare measurements using the ratio method. Business Decisions. All business owners want to succeed in their chosen field. The most logical way for a company to obtain longevity is to remain educated about what their business will face in the future. Statistics are used in this capacity. A company will prosper if it is able to use statistical data to make sound business decisions.
For example, a manager of a warehouse is aware that from November through January they will need to add 5 employees to their staff in order to meet the demands of their customers. This manager knows this because it is a trend that is reflected by statistics published by the sales department. The manager knows that in order to be successful throughout the season of higher demand there needs to be an allowance in the budget for salaries for these 5 extra workers. The statistics presented to management allows for proper planning.
Some Common Problems. In any business there are many factors to consider when an owner is looking at the possibility of expanding. Statistics based on a certain demographical area will help to choose an affluent location where the business will prosper. Another situation statistics play a major role in is financing. In order for a new business to obtain funding a business plan is needed. Statistics are presented by the aspiring business owner in the business plan to show the need for what he or she has to offer.
These statistics are also used by the financing entity to determine the risk factor within an industry. Things of this nature can greatly affect the outcome of a business loan. A more foreboding problem some businesses face is whether or not to lay off employees. Statistics are used in this case to determine how many people would need to be laid off from jobs to keep the company afloat. This is a harsh problem for a company to face, but it is a situation many businesses have found themselves dealing with in recent years.
This is an even more important reason to have reliable and trustworthy statistics available to aide in the decision making process. The overall idea of statistics used in business is to make beneficial and financially sound decisions. The more facts that are involved in any decision making process the better. In business the owner of a company has a responsibility to act intelligently when making decisions that will affect multiple employees and their families. Statistics are the main tools needed for a successful business structure.
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Intro to Statistics. (2016, Sep 30). Retrieved from https://studymoose.com/intro-to-statistics-essay