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- The Benefits of Business Intelligence for Startups - October 26, 2016
You have probably already heard that eight out of 10 startups fail within 12 months, but have you ever wondered why that happens? In order to find success in the startup and entrepreneurial world, you have to know what it takes to run a successful company; however, you also have to know why so many businesses fail.
CB Insights recently did a “post-mortem” on more than 100 failed startups, and as a part of that effort, researchers asked the people involved in each startup why they thought it failed. The study revealed 20 reasons, with most people citing multiple causes.
The reasons cited fell into seven different categories, each consisting of a special intellectual (or in some cases, emotional) limitation. The top three reasons consist of arrogance (no market need for the product, lack of business model, not using advisors), shortsightedness (running out of money, cost issues, no investor interest) and hubris (poor marketing, ignoring customers). While it may be easy to start a business, keeping afloat and profitable is a completely different story.
Today, fortunately, small business owners have a wide range of software solutions that can help resolve these issues and keep a startup in business for many years.
For years, almost exclusively, large corporations relied on the power of expensive software to drive success. Disjointed, incomplete data was analyzed for opportunities and trends, then insights were matched to resources, which means that only the biggest businesses were in a good position to prosper in this turbulent market. CRM software emerged and began the process of connecting disparate amounts of financial and customer data. ERP (Enterprise Resource Planning) has transformed unwieldy, rigid structures and processes responsive tools. Basically, these software solutions turned the biggest weaknesses of big corporations into one of its greatest assets.
The insights provided by the new software helped businesses become more productive, and consequently, more profitable – it completely changed the way big corporations did business. This created a big rift between small and big business. Where SMBs and startups were innovative, enterprises were intelligent, and where SMBs were agile, enterprises were prepared. While software vendors saturated the market with new software, startups and small and medium-sized businesses were completely ignored. However, the next generation was preparing itself for its own revolution. From the web to smartphones and tablets, small companies were equipping themselves with powerful connected tools.
Fast-forward to the present, and most startups have access to powerful software that provides many of the features, functions and advantages enterprise has held for such a long time. Seamless integrations allow accounting systems to talk to the point of sale, timeshift to sync with payroll and CRM to work with marketing platforms. There is an abundance of affordable solutions, and business owners are finally starting to realize the potential of the technology. However, according to an MIT study, while the vast majority of managers believe that “digital transformation” is vital to their organizations, 63 percent of them say that the pace of tech change in their business is just too slow.
If you want to adopt new technology, it is useful to mention that each software integration makes every other element look more capable. For instance, e-commerce platforms push transactional data into account, invoice chasing software hunts down unpaid debts automatically, etc. All of this is producing a mass of data, which can be used to drive efficiency and profitability for companies of all sizes, down to the smallest micro-startups. But the potential of all of this data has to be realized; according to MIT Technology Review, less than 0.5 percent of all data is ever properly gathered, analyzed and used.
Data is only useful for your business when it is easy to understand, as well as simple to share and discuss with people that need it, when they need it. With modern business intelligence solutions, startup owners and their financial advisors have a top-down view of everything that contributes to success. From knowing what products sell the best and who is buying them or planning prioritized action points based on real-time insights, cutting-edge business intelligence software is handing enterprise advantages to small business everywhere.
As mentioned before, keeping your business running is certainly not an easy task, especially when the market is getting flooded with more entrepreneurs every day. According to Kauffman Index of Startup Activity, there are roughly 530,000 new business owners every month in the United States. This means that before the year ends, you are looking at an additional 6 million new competitors. Therefore, in order to gain a competitive edge, you need to realize the limitations of amateur software and free internet tools, step your game up and expand your business with the newest enterprise solutions.