Executive leaders of small businesses and start-ups frequently lament that they lack the same access to data and insights that enterprise competitors and other more entrenched players enjoy.
Most SMBs haven’t fully adopted business intelligence (BI) analytics, citing various reasons such as a lack of scalable technology infrastructure or skilled human capital. They’re also hesitant to invest in BI because of the perception that it doesn’t align with budget and operational constraints.
Fortune Business Insights predicts that the global BI market will grow to $43 billion by 2028, up from $24 billion in 2021. However, the overall adoption rate of BI is just 26 per cent compared to 80 per cent in companies with over 5,000 employees. These findings clearly indicate that larger corporations use BI much more than SMBs.
So, what’s stopping them?
“There’s no single answer to this question. One issue is that small businesses rarely have enough resources to set up a dedicated data science (DS) team, nor can they afford to bring in temporary consultants,” said Itzik Levy, CEO of small business management software vcita. “They’re frequently forced to make difficult tradeoffs when it comes to priorities, nobody has the time to learn a new specialised skill.”
Mindset is also a problem. “The main limitation of SMEs to implement analytics is the fact that they think that these new approaches are only applicable to large companies,” wrote Jesus Fajardo, a senior data science analyst.
The solution: business intelligence tools
While mindset is a difficult obstacle to overcome, technology and budget are easier ones to surmount.
Most technology functions of businesses today are SaaS-driven. They have levelled the playing field for SMBs and helped them create automated processes for:
- Creating invoices, proposals, and quotes
- Sending messages and scheduling appointments with clients
- Tracking time spent on different projects
- Running marketing campaigns
However, the data that goes into and comes out of all these processes can be overwhelming, complex, and expensive to collect. That’s where business intelligence (BI) apps and tools come in.
SMBs that have undergone digital transformation are already generating data relating to these business operations disciplines. With the right BI features, they can derive insights that help meet their business objectives from those signals.
While the capabilities of actual tools vary, it’s important to understand how to make BI work to your advantage. Small business owners can use BI to do things not normally expected of them and hitherto the domain of enterprise companies – such as analysing consumer behaviour, estimating market trends, forecasting sales, and improving customer experience.
Let’s break down some of these advantages.
Make informed business decisions
What do you need to make business decisions that move the needle? BI can help you in the following ways:
Identify market trends: Managers and analysts can use data collected from various sources to identify upcoming and maturing products in the market and changing consumer consumption patterns. They can then use this data to measure the company’s sales performance and predict future outcomes.
Track the performance of your business: Business performance goes way beyond revenue and profits. BI helps you set goals, map out tactics to meet them, understand how you’re performing vis-a-vis these goals, and what changes you can make to stay on track.
Compare data with competitors: Competitive analytics is perhaps the biggest benefit BI tools confers on new players and SMBs. You can track competitors’ strategies and performance in branding, marketing, production, stock market, and compare it with your own over a period of time.
Increase profit margins: Identifying and plugging gaps in different areas of operations – whether it’s sourcing, marketing or delivery – can help SMBs save a dollar here and a dollar there and lead to significant profits at the end of the year.
Predict the success of your business: If you know where the market is going, what your competition is doing, as well as how much you’re selling over time, it’s a matter of time before you improve your forecasting accuracy.
Provide a great customer experience
You can gain valuable customer information using the right BI analytics. This data will allow you to better understand customers’ demographics (such as age, gender, and location), shopping habits, interests and intents, as well as preferred communication channels.
You can then go a step further to see how customers are engaging with your brand, what they’re saying about your products (and customer service), and analyse their likes and dislikes to improve the efficiency of your marketing campaigns.
BI can help you answer questions about your customers, such as:
- What are the demographics of my customer base?
- Which products did they buy more of?
- Which products receive the maximum complaints?
- What new trends is my audience gravitating towards?
Each of these answers tells you a bit more about your customers’ dynamics with your business. BI is all about understanding the customer journey from the first brand interaction to conversion.
For example, local businesses such as pavers, roofers, and landscapers can find out which of their services are more in-demand, what designs their customers prefer, average incomes and other demographic information, etc. This helps them focus on the more profitable customer segments and engage them on appropriate channels.
Data also helps you improve customer experience by providing personalised recommendations, targeted campaigns, and automated messages based on shopping behaviour.
Improve workforce productivity
Remote and hybrid work practices have changed the way most organisations operate, leading to new challenges in maintaining a productive workforce. Add to that, the organisation structure itself has changed in many companies – there are no hierarchies anymore, and teams are formed and disbanded according to the necessities of the project at hand.
This is where BI can provide critical insights for SMBs. AI-driven technology can bundle up years of HR experience and enable everyday decisions that improve employee productivity.
The right tools can help you track individual/team performance, analyse strengths and weaknesses, identify skills gaps, and create a rewards-and-development progression plan that will lead to optimal performance from each employee.
Leverage data to fine-tune strategy
With the help of BI tools, SMBs can access critical data on customer behavior, social media marketing, inventory management, and more – in real time. In fact, lean companies are now moving towards a DIY, smart approach to data, characterised as self-service business intelligence (SSBI). SSBI is all about allowing the end-user to interact with data directly as well as manage it.
The more control your employees have over data, the more chances your strategies have of succeeding. BI provides an objective analysis of how your business is performing and helps identify the most effective strategy you can use to achieve stated goals and targets. It provides valuable information on where your company should focus its efforts to increase sales and drive profits.
How, you ask?
- SMBs can monitor each marketing campaign at a granular level, analyse its performance, and change track according to KPIs. To go a step further, a small or local business can even monitor global competitors’ marketing campaigns to a great extent and tweak its marketing tactics accordingly.
- BI simplifies traditionally complex forecasting in the form of SaaS tools and levels the playing field for SMBs. It lets them accurately predict future outcomes based on past data.
- Data visualisation tools enable SMBs to lay out critical data visually in a form that reveals patterns in data even to inexperienced observers.
Business intelligence aims to help leaders, managers, and departmental employees by providing them with usable key information at the right times. That brings us back to the question of mindset.
“Small business owners need BI to look for those parts of the business that are driving the most growth, which might be drowned out by all the noise of getting things done,” Levy emphasised. “Once these growth levers have been identified, leaders can double down in the right places to bolster revenue.”
The party has just begun
A recent research paper identified big data analytics as a core driver of operational resilience for SMBs. With better data integration and analysis, SMBs can enable organisational knowledge-sharing, stay competitive, and spur innovation.
While data analytics answers specific queries, explains why events took place, and predicts what happens next, BI builds powerful non-linear models that drive business strategy.
Lean SMBs that can gather timely intelligence from the powerful BI platforms available today will steal a march over the competition by identifying opportunities and threats faster. They will know where to spend their money, how much to spend, and what outcomes to expect.