In a climate of economic volatility, changing consumers, and globalized competition, small to medium-sized enterprises (SMEs) perhaps need access to accurate, actionable business insight into data even more than bigger enterprises do.
Most SMEs are operating on tight margins and don’t have endless reservoirs of cash and credit. They need up-to-the-minute information about trends in their businesses so that they can quickly identify problems, react to emerging challenges, and anticipate opportunities.
Business Intelligence (BI) is a very broad topic, and part of the challenge we face is that the term ‘BI’ is used very loosely and is often considered by SMEs to only be affordable and necessary for bigger enterprises. Further terminology, like Business Analytics and Big Data can make it even more daunting. SMEs need to look past the jargon. Business Intelligence is about something that every owner or manager of a SME needs. It’s about access to information he or she requires for making the best business decisions for the organisation.
It is more affordable, accessible, and essential for SMEs to have their fingers on the pulse of their company data than ever before. Today, tools that provide better insight into a company’s data are just as relevant and approachable for small businesses as for their larger counterparts.
SMEs have traditionally thought of such technology as slow, expensive and complex to implement, but today’s solutions are easy to deploy and use, offering powerful out of the box functionality. SMEs simply need to use business solutions that allow them to consume their data in a meaningful format.
For most small businesses, that would be software that allows them to view and manipulate data in Microsoft Excel – most of them already use this tool to manipulate and analyse their financial information. As a standalone solution, Excel is only viable up to the point where the business moves to accounting software for more security and accuracy.
At this point, the SME may find itself with large gaps in the information that managers would like to see in financial and business reports. They may try to wrangle the data into a meaningful format using Excel, but this is time-consuming and invariably leads to ‘spreadsheet’ chaos.
What SMEs need instead is a flexible reporting tool that allows them to seamlessly pull company data into a format that is easy for managers to understand and digest, and to get this information into the hands of the people who make the decisions.
Here are some signs a SME might benefit from the business insight provided by business reporting software:
- Managers are spending a lot of time capturing or importing information into Excel spreadsheets for analysis.
- A lack of insight into business metrics such as profitability by customer, territory or product; revenue growth; or costs compared to industry benchmarks.
- An inability to make confident budgets and forecasts based on historical information.
- Managers relying on inconsistent information from multiple sources and systems to make decisions.
- Difficulty sharing information among managers in a consistent format.
For example, they may be asking themselves questions like, how far can we stretch our creditors’ days and what might that mean for cash flow? What difference would it make if we offered debtors 28 days to pay instead of 60? What resources will we need in terms of inventory and headcount if our business grows by 10%? How profitable would that growth be? How much have sales grown or shrunk against the same period last year? Why? What impact will the anticipated electricity tariff increase have on our profitability?
Better financial intelligence can empower SMEs by giving them the information they need to be more competitive and profitable. Because they can be more agile than big businesses, they are in a good position to react quickly to emerging trends when they have access to timely and accurate information.
Flexible reporting software can help SMEs keep their fingers on the pulse of their business all the time so that they know when to cut costs and when to invest; when they should be worried about cash flow; on which products and customers they should focus resources; and more. It’s rapidly becoming as indispensable to SMEs as their accounting systems.
