A regular survey we run every quarter, the MYOB Business Monitor, constantly highlights that although Kiwi business people are capable and committed, often performing better than their counterparts across the Tasman, many show a worrying lack of awareness of some of the fundamental indicators of business health.
According to the latest Monitor, released in April this year, 37% of all Kiwi business owners used their bank statement to track cash flow, rather than employing a computerised accounting system (25%).
In the midst of a shaky economic recovery, the fact that well over a third of all businesses are not taking a systematic approach to monitoring one of their key business indicators points to a significant risk – not only for these businesses, but for the whole economy. As many have learnt in the hardest possible way during the recession, cash flow, rather than sales or profit, really is king. Without being able to accurately monitor and forecast their cash position, many businesses are putting themselves closer to the edge than they really need to, probably without knowing why.
Typically, the issue is a combination of time and understanding. As a nation of small and medium businesses, the entrepreneurial drive that leads many people to start their own business can conflict with the measured, planned approach required to create the foundation of successful longterm performance – and the best use of business intelligence. Most Kiwi business people tell us they went into business for themselves to pursue a passion, creating a role they love, rather than to manage a business, with all the discipline that can entail.
For most businesses though, monitoring key indicators and making informed decisions, based on accurate modelling and upto- the-minute data, shouldn’t be something that is too complex or too expensive to undertake. The kinds of reporting and analysis tools most businesses require to maintain fi nancial health are readily available.
However, understanding the myriad demands on the business owner or manager, particularly those in a small business or sole trader operation, has highlighted the need for a new generation of BI tools that not only provide the detail managers need to make informed decisions, but also put the detail front and centre, in a way that can be readily understood, regularly accessed and constantly updated with accurate data.
This has led us to the concept of the business dashboard, a way of presenting key fi nancial indicators in a format that lets business owners of all kinds and levels of fi nancial knowledge easily focus on the fundamentals of good business.
Good data is only useful – and the best decision-making is only possible – with the right interpretation. Even with the best solutions, the human factor is a crucial element of business intelligence, especially for the business owner who isn’t specialised in detailed financial analysis.
Another constant theme from the Monitor is the number of businesses who tell us that access to business advice would make a significant difference to the performance of their operation. It also revealed that their most trusted advisor is their accountant by a long measure, over and above any other source of business advice and information.
That combination represents the ideal future for business intelligence that works for most Kiwi businesses. Strong, simple accounting and business management solutions, coupled with good analysis and advice, provided by a trusted source like an accountant, will give New Zealand business – and the economy – a real future of both growth and security.