All important data is stored in some sort of database - sometimes it's a small Microsoft Access database or an enterprise-level Oracle database - but the database is always the nerve-center of the business.

Any statistic you need or information you must find can be extracted from a properly designed database. And that's the key: there is only one correct way to design databases.

This is where many businesses run into trouble. Errors occur, data is wrong, and headaches abound when a database isn't designed following a strict set of rules. How do you know if your database isn't designed well? Think about your business and answer these questions:

1. Are you keeping track of information in Microsoft Excel?

If you're only keeping track of information in Microsoft Excel, then you're not using a database. Excel is wonderful for crunching numbers, but not for storing related data. Using Excel as a database, even for basic information, is like using a hammer for brain surgery. Technically it's possible, but it's not the right tool, and you'll likely end up with a massive headache when you're done.

2. When entering information, do you repeatedly type the same word or phrase?

A tell-tale sign of bad databases is the need to purposely duplicate data. For example, entering someone's name in two different places means the database is designed improperly, creating an environment that's doing more harm than good. Typos always happen, but in a well-designed database they don't create nearly as much trouble.

3. Do you have to work hard to get simple statistics?

This is the ultimate test of bad business data. If something as simple as showing all sales from last month or showing all of your contacts that live in a specific town takes you more than 10 seconds to accomplish, your time is being wasted.

So what happens when you find your database lacking? The best plan for moving forward is to organize all of your information. Write down what you currently track (either on paper or digitally), what you would like to keep track of, and what you need your information to tell you.

Once you have a handle on what information your business relies on, you can begin planning to have a database designed, or start shopping for industry-specific software. Always remember, designed well, a database can save your business time, money and frustration. Designed poorly, and they'll hurt like a hammer to your head.