Bloated inventory is always going to be a threat to business cash flow. Any increase in inventory is a sign that your business has purchased more goods than it’s sold. But, if you increase your inventory, you better make sure you have the cash inflow to offset the cash outflow you’ve just incurred, or risk a negative impact on your cash balance.
To lessen the problem and free up cash flow, small businesses need controls in place, and inventory needs must be prioritized.
In theory, that’s great, but how can you determine which products contribute most to your bottom line? And what should you be stocking up on?
This is where predictive analytics, also known as business intelligence (BI) can help. By taking the guesswork out of future customer buying behaviors, small businesses can reach a happy balance between demand and supply. Inventory gains are not the only benefit, sales and marketing activities can also be optimized.
Here’s more on what BI can do for your business and some tools that can help:
How BI can Take the Guesswork out of Managing Inventory
Imagine if you ran an Italian restaurant and you knew how many pizzas (and what toppings), pasta dishes, or subs you’d sell on any given day – the impact on your buying decisions, inventory and, ultimately, your cash flow would be game changing. You’d know exactly which fresh ingredients you’d need, reduce the risk of waste, and keep your customers happy.
BI is also a Great Tool for Informing your Marketing
You could also use the data to boost your marketing. By knowing which dishes are popular and which aren’t, you’ll know which menu items could use a promotional boost and which menu items to ditch. BI can also help you analyze the success of marketing campaigns and make sure the ROI of every dollar is maximized.
BI Tools for Small Business
Many small business owners already have a solid grip on historical or seasonal trends and how they impact demand and supply. But, as your business grows, predicting your inventory needs can become more complex. This is where business intelligence software can help.
BI tools were once the domain of large enterprise but today some cloud-based no-cost/low-cost, options are changing the landscape.
Here are a few low-cost, small business-friendly BI tools to consider:
- Tableau – Rated as a leader in the BI market by Gartner, Tableau is lauded for its intuitive dashboard-based visual data discovery capabilities that can be achieved without extensive skills or training. It’s available as a desktop or cloud version.
- Geckoboard – An inexpensive ($49 a person for one user) dashboard BI platform hosted in the cloud. Set-up is easy, no maintenance required. Data can be pulled from 80+ services including Google Analytics, Twitter, Salesforce, Xero, and more. Widgets turn data into simple visualizations. Month-to-month payment plans, no contract required.
- Leftronic – Another highly-customizable tool with plenty of plug-ins (FreshBooks, AWS, Harvest, etc.). Starts at $42 per month.
- Inventory Now – While not a true BI tool, this iOS app ($4.99) helps you keep an eye on inventory movements and their impact on cash flow. Track inventory lifecycle (including units bought, shifted, shipped, buy price and profit) from anywhere. When you buy new inventory, you tell the app about it. As your products get received, sold, shipped and delivered, you mark them as so within the app. This gives an overview of your inventory and the number of items that are in a particular status.
Plan Your Entrance into Business Intelligence
Although these are all easy-to-use tools, business intelligence isn’t something to rush. Here are some things to consider:
- What are your business needs/challenges?
- Does your company have enough raw operational data to draw on?
- Who will take ownership of interpreting the data and help you manage inventory, generate more revenue and create positive cash flow?
Hit up your network, get their input or talk to an analytics consultant, taking stock of these elements will help you get more from your investment.