Business intelligence is about effective business management by making use of Key Performance Indicators (KPI’s) or figures .

Too often management focus on Earnings and Loss and not more on other KPI’s.

A P & L shows the outcomes of activities in a company . It’s the result of all tasks carried out it that it earns income from . But why delay for all tasks to be carried out before making management decisions about the company ? That seems a lot like shutting the gate after the horse has bolted.

A P & L also shows the averages of activities - i.e the average earnings made on all products or services delivered . The Parado Principle states 20% of gross revenue make 80% of the earnings . So this principle means the P & L isn’t giving us all the information we need to know for proper business management .

Think of a business as being like a 3 legged stool . For it to be flat on top it needs to have equal length legs. A business is similar .

A business’s 3 legs (for service and manufacturing businesses) are: new sales $, work produced $ and banked $. All 3 amounts need to be similar every week or month for the business to be stable or at least managed better .

If a business sells more than its production capacity and does this 4 periods in sequence it has a challenge with not enough production ability . If a company generates less sales its production ability , it can have a problem with not enough production for the staff . And if a business doesn’t consistenly deposit cash what it produces then it can run into money problems .

All 3 legs nees to be managed for business management . Just focusing on the P & L or banking doesn’t actually help. That’s NOT business intelligence.

Business management comes about through business intelligence, which leads to large and small business development.

Tags: small business development, small business management

This entry was posted on Sunday, February 27th, 2011 at 2:40 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.