In a recent article, Jim Blasingame of SmallBusinessAdvocate.com suggests that all small business owners should ask where their business is going (read full article here) and reveals the best questions to ask to conduct this exercise as per John Dini, president of Business Performance Network, Inc.:
- “How much sales revenue do I plan to achieve next year?”
- “What gross profit – the number and the percentage – do I need to achieve my sales revenue projection?”
- “What are the most important things I can do to achieve this performance?”
- “How will my personal role change by the end of the coming year?”
- “What is the most desirable personal goal I would like to make for myself?”
Pretty simple questions which allow for straightforward reflection and planning. Or do they? The article led me to realize that many small businesses do not have financials presented in such a way as to easily see even month-on-month or year-on-year trends, making it difficult for them to set budgets based on existing evidence, never mind building in what they think about future conditions and organizational capability. How will they know whether it is better marketing, more advertising, better sales training, new products, better online capability or expanded market penetration that is required to improve performance?
This is why Business Intelligence is just as important for a small business as for larger counterparts. An accounting package presents financials that are inadequate and too inflexible for a small business owner to get the answers to the simplest of strategic questions. And often, with all the repetitive manual work required to produce monthly financial statements, they are too out-dated to make informed decisions. In order to gain and maintain a competitive advantage some reliable, timely information must be made available from across the business in a format that allows for effective decision-making. No rocket science, just instant visibility of, for example:
- Sales, cost of sales, expenses and gross profit – month-on-month and year-to-date versus the previous year
- Top 5 and bottom 5 products, customers, suppliers, expenses etc.
- Sales by sales rep and/or region
Present this information on demand, in a ready-to-use Excel report format of the small business owner’s choice and include the ability to drill down to details, and he/she has a powerful tool with which to provide answers to the question ‘Where is my business going?’. Make sure you answer these questions for your small business now to get off to a flying start in 2011.
