Why Business Intelligence is the #1 Thing Small Businesses Need
As a business owner in 2018, you’re luckier than all of your predecessors.
Fast, cheap software means it’s easier than ever to track exactly how much your business is earning and spending. Need to know how to increase your income quickly? No problem! You – or your IT specialists – can easily tap into your existing data on what’s selling in order to maximize your appeal to target customers. Infinite computational possibilities are right at your fingertips. In 2018, business intelligence is all about choice and seemingly limitless possibility.
So, if there’s no shortage of software, data and know-how … why do so many small businesses struggle to grow revenues?
To put it more bluntly: Why do 8 out of 10 small businesses fail within the first 18 months?
Business Intelligence is not just for Enterprise Clients
Big data is an unparalleled resource for companies today. But these huge volumes of information — as well as the incredibly granular details they contain — require highly sophisticated software for analysis and organization. Huge amounts of data — require a skilled team to steward it. We’re talking IT specialists, trained consultants, data centers and more. Enterprise corporations can cobble together such a team (or hire a consulting firm to do so) without too much difficulty. But for small businesses, there are
lower levels of data and only relevant data is needed. The same level of effort is not required. While a lean company might pursue business intelligence as a means of understanding its customers to improve its bottom line — the costs associated with the setup and analysis of the data to derive new strategies can quickly generate extraordinary returns on investment.
According to research conducted by McKinsey, companies using analytics have 126% profit improvements over its competitors. The best part is that as a small-business, increasing your cash flow through business intelligence does not require the same effort of hiring staff, making enormous changes to the current systems or spending a fortune. The delicate balance for growing businesses between costs and benefits to implement business intelligence becomes a no-brainer once you consider the 13 times Average ROI reported by companies making investments in analytics solutions.
The Right Way for Small Businesses to Approach BI
Small businesses need different BI solutions than their large business counterparts, that is not at all to say that small businesses don’t get the same value from these solutions.
Business intelligence for small businesses is just as — if not even more — important. It’s a critical item on any small business’ must-have checklist.
So, what are the main differences with how successful BI works for a small business vs. how it works for enterprise corporations? Here are 4 key distinctions.
1) Ability to make Quick Adjustments
For small businesses, as compared to their larger counterparts, emotion and instinct are just as important as data and statistics.
Small businesses have the advantage of being lean, and generally they have less data than corporations by orders of magnitude. This is an incredible advantage because it makes it easier for professionals to classify and extract important data. This data enables small businesses to get a deeper awareness of their business and their external environment enabling them to make changes a lot quicker as compared to enterprise corporations. Enterprise corporations are like huge ships with a very small propeller whereas a small business can change course and make adjustments swiftly. Small business owners must remind themselves not to get lost in the weeds — that is, not to get so obsessed with metrics and data that has the least impact making them lose sight of the most important and effective goals. These goals are set by analyzing the most impactful and relevant information found in the company’s financial, marketing, web, and operations data.
2) Crawl, Walk, Run
Per SAP, small businesses can only implement lasting change when they take the “crawl, walk, run” approach. You can dress that truism up in whatever proverb you prefer: Don’t put the cart before the horse. Don’t bite off more than you can chew. One foot in front of the other. Reflecting on your past decisions compared to the performance changes, a business owner can create a strategic plan and start taking small steps to go in that direction. Small steps that are well thought of and are rooted in objective data can create momentum quickly and combined together over a short period of time can create massive change.
The point is: Small business owners must use their agility to implement the right solutions at the right time. Keep the focus on their passion, customer experience, their product or service. If they feel that they don’t have time to dedicate to the collection and analyzing of the information, leave the data scrutiny to the Experts.
3) Business Awareness and Self-Assessment Are Critical
This one’s very straightforward: In order to maximize BI efforts, as well as to ensure that new processes are having the desired effect, small businesses must capitalize on their built-in opportunities for stewarding their own data and assessing their own strengths and shortcomings. One of the most important factors in assessing your own strengths and weaknesses is not to judge it as good or bad but rather right or wrong. This enables a business owner to make decisions rationally without getting emotionally involved.
As human beings, we are designed to avoid looking into things that will cause us discomfort or remind us of a change we know that needs to be implemented. Avoiding the deepening of business awareness can have small problems go unaddressed and turn into major problems down the road. On the other hand, higher level of business awareness through business intelligence can help you understand your business better and increase your confidence in decision making and then tracking the results through the analysis of past performance of the company and the fluctuation in trends. Their size, scale and scope offers a massive advantage in this field versus enterprise corporations, who could never dream to maintain the level of helpful self-analysis and on-the-fly introspection afforded to small businesses.
4) Use Web Analytics to Your Advantage
Digital marketing is one area in which small businesses don’t realize the true potential of data available to them through their web presence and website visitors. Enterprise companies capitalize on this data drastically and are able to tailor their marketing and pricing models to appeal to a larger audience that is already visiting them online. Thankfully, we live in an era where advertising online is easy, easily affordable for small businesses — and absolutely vital. Once a small business has taken this integral step towards advertising online and strengthing their online presence, they can start tracking their data through analytics. You can derive intelligence like where their web traffic is coming from, what kinds of products, services, blogs, topics and pages attract the most traffic, what day and time of the week is the busiest in terms of traffic, and what kinds of keywords people are typing into search engines to arrive at their website. They can also track where and how their traffic converts to sales leads, and where those leads come from.
Small businesses must cultivate their online presence for a variety of reasons including the ones mentioned above. It’s an endeavor that has a direct impact on ROI, and it produces incredibly valuable analytics that offers priceless insights into the core business and its customers.
Even though business intelligence for small business isn’t the same as it is for enterprise companies, that doesn’t mean that small businesses should skip the exercise altogether. In fact, where margins are tighter and volume is smaller, business intelligence can be the key that unlocks sustainability and greater profits – both of which are key to making sure small businesses are part of the 20% that survive – and not the 80% that fail.