If you’ve been around any big businesses in the past several years, you’ve most likely heard the term “Business Intelligence.” But what does it really mean?
Big business consultants can talk for hours about business intelligence, but in the end, you often feel even more confused than before they started their explanation. In turn, many small business owners understandably decide to ignore “business intelligence” because the concept seems too complex to be relevant to their companies and day-to-day operations.
But just because big business has over-complicated the term “business intelligence” doesn’t mean it isn’t an important concept for small businesses to consider. Here’s the secret: Business intelligence is really just the process of learning more about your business by analyzing the numbers and doing something with that knowledge. This concept has been blown up and scrutinized repeatedly by executives, consultants and professors—and for good reason. It can have a HUGE impact on your business, regardless of its size.
So you might be thinking, “Great! I need to get some of that business intelligence for my small company!” But here’s the next secret: You are already doing it! By simply starting a company or working for a small business, I bet you have hacked your own business intelligence without even knowing it. Here are just a few examples I have seen:
- A business owner creating their own spreadsheet to manage their cash flow and to forecast what is going to be in the bank in the next 30, 60 or 90 days.
- Someone explaining to their peers that business is “always slow in the summers because everyone is out of school during that time.”
- A business owner or a marketing manager tracking the company’s number of orders against their social media efforts to figure out what is or isn’t working in their current campaigns.
In each example above, the person has created his or her own hack based on analyzing the historical numbers in order to gain a better understanding of some part of the business. In my experience, small businesses hack business intelligence all the time. It is whatever system you have cobbled together to manage and improve a portion of your business. Most of the time, you are the only one looking at this system, and you are the only one analyzing the results.
In my own experience, business intelligence was always particularly critical for finding smarter ways to operate financially. Applying business intelligence to your cash flow is especially important for small businesses owners, who run lean and know that their margins can be wildly affected by even the smallest changes. Because you are most likely operating on a smaller budget than big companies, there is no reason you shouldn’t utilize the same tricks as large corporations to make sure you’re not letting any of your precious capital go to waste.
There are three main steps to any business intelligence system or process:
- First, there is a problem, usually one that keeps you up at night.
- Second, you have to start organizing the numbers into something meaningful. In other words, you need to turn raw data into information about your business.
- Third, you must analyze the results and gain some sort of knowledge or insight from the information.
You probably do this all the time, right? Now that I’ve explained it for those of us in the real world, you might even be thinking that you are already an expert in business intelligence and strategy. Not so fast. There is still something to learn from big business when it comes to business intelligence.
Business owners are great at creating their own processes, but they generally lack the ability to share their systems and intelligence with the rest of the company so that others can benefit and improve.
Here is what small business needs to glean from big business: The ability to set aside the necessary time to review, analyze and collaborate on the results. When I worked directly for a big business, we would have an executive meeting each month, where managers had to report directly to the president in front of other executives or managers.
This discussion could be uncomfortable at times, and it even included some yelling, but I found it to be the most valuable part of the business intelligence process. Results and ideas were challenged by peers. A better understanding of the numbers was gained by all involved. New meetings were set up to take a deeper dive into problem areas and to search for solutions. Tasks were handed out, and you knew you were going to be held responsible because you were going to be asked about it in the next executive meeting, if not sooner.
So I challenge small businesses to push your business intelligence further. Take your currently hacked business intelligence systems out of their silos, and start collaborating within your business, with employees, with your accountant, with friends and mentors, or even with your therapist.
You need to create the right team to challenge your interpretation of the results, provide unique perspectives into how your business operates, and take ownership of learning even more about what makes your company successful. If you’re open to challenging your assumptions, it will only be a matter of time before you see the results of your efforts, which will lead to bigger numbers in your bottom line.