One of the biggest risks to small business cash flow is bloated inventory. To mitigate the problem and free u cash flow, businesses need controls in place and inventory needs must be prioritized.
But how can you determine which items contribute most to your bottom line? And what should you be stocking up on?
One of the most effective approaches to doing this is to incorporate predictive analytics into your business. Predictive analysis, also known as business intelligence (BI), takes a lot of the guess work out of understanding customer buying behaviors.
Using BI to Take the Guesswork Out of Buying Decisions
Imagine if you ran a coffee shop and you knew how many donuts, croissants and lattes you were going to sell on any given day – the impact on your inventory management process would be awesome! You’d have the insight to order all the ingredients you need, minimize the length of time inventory sits unsold, while keeping your customers happy.
Even better, you’d be able to gauge what combinations of orders are popular, and offer specials around these to entice your customers back.
The concept is quite simple – using predictive analysis, savvy business owners can analyze historical trends to anticipate and prepare for the future. If you know that you sell more of product A on a certain day or even time of year, then you can prepare your inventory accordingly and minimize the time stock sits around. You can also use the data to get a better grip on sales forecasting.
Learning from historical trends is nothing new, but as your business grows and inventory loads increase, predicting your inventory needs can become more complex. This is where business intelligence software can help.
BI tools used to be reserved for the big guns, but nowadays a number of small business-friendly, no-cost/low-cost, easy-to-manage options have burst onto the scene – much of it thanks to the growth of cloud technology. There’s even BI tools you can use when your not in the office.
But BI isn’t just for predicting your purchasing needs. BI can also help you analyze the effectiveness of marketing campaigns, social media, and understand what’s driving your sales engine. Ultimately, BI tools are about helping you free up cash flow.
4 Small Business-Ready BI Tools
The industry is also consolidating fast, with many of the early players being swept up by in a frenzy of acquisitions. Here are a few inexpensive BI tools that accommodate the needs of small business nicely:
- Tableau, for example, doesn’t require any programming know-how and provides dashboard-based visualization features that integrate data from various sources for easy interpretation. Tableau is available as a free cloud-based version that can be accessed via tablets.
- Geckoboard – An inexpensive dashboard BI tool that helps you understand important data at a glance. Geckoboard lets you choose the metrics you need (marketing, sales, etc.) based on your business goals – rather than getting overwhelmed with a whole load of data at once. Geckoboard also doesn’t require a contract, simply pay month-to-month. Pricing starts as low as $17 per month.
- Leftronic – Highly customizable with ample room for lots of plug-ins (FreshBooks, Facebook, Google Analytics, AWS, and more), Leftronic is a flexible, browser-based tool for managing and interpreting numerous data sources. Leftronic also starts at $17 per month.
- Birst– Available as an on-premise or cloud solution, Birst hooks up to many ERP and CRM systems such as Salesforce, Marketo, Microsoft and others. Its enterprise class analytics are quick to deploy and offers extensive dashboard based analytics and reporting.
Although these are all easy-to-use tools, BI isn’t something to rush into without careful planning and assessment. Things to consider include:
- Does your company have enough raw operational data to draw on?
- Who’s going to interpret the data and help you control inventory, generate more revenue and create positive cash flow?
- What business needs are you trying to overcome (BI tools streamline the analysis of many kinds of data at a granular level from email marketing to sales analytics)?
Taking stock of these elements (with the help of an analytics consultant, if you have the budget) will ensure you get more from your investment.
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