Business Intel: Why look back when you can access real-time data?

Business intelligence is ‘the methods and technologies that gather, store, report, and analyze business data to help people make business decisions.” Although technically this definition is accurate, the term BI is often used rather loosely even within our own industry, inferring that any particular solution labeled BI will be inclusive of all information necessary for managers to make timely, accurate and informed decisions on a daily basis across the entire enterprise. 

Often, this is not the case due to data limits such as the number and quality of data sources involved, the breadth of content satisfying departmental requirements, access to the information by those that need it, the BI vendor’s knowledge of the specific industry and finally, the cost.  Best-in-class BI systems must support real-time decision making in a fluid business environment with the goals of increasing revenue, decreasing expenses and improving operational efficiencies.   This is achieved by implementing the practice of business performance management ‘the set of management and analytic processes that enables the management of an organization’s performance to achieve one or more pre-selected goals.”

The era of looking back to see how you did last month are over as margins become narrower and time to react shrinks.  In today’s increasingly competitive market, dealers must look forward, establish clear goals and monitor them daily to avoid costly surprises.  Through the use of well-designed BI dashboards, leading dealers can now spot and correct such issues quickly and proactively to reach predictable month-end results.

The importance of financial planning and ongoing financial stability cannot be overstated.  At a minimum, such planning includes the development of a profit plan as well as understanding your banking plan and respecting the important relationship that you have with your banker.  The development of your desired monthly goals and segmenting and monitoring them down to a meaningful level will not only provide your company with purpose and your employees with a path to success, but will also assist in keeping you in a state of heightened awareness of your priorities.  This allows managers, on an exception basis, to focus on any issues threatening the desired results.  

In addition to the financial plan, a banking plan is integral to your ability to meet the stated goals.  Ensure that you have an adequate short and long term debt structure in place, coupled with the disciplined use of your credit line.  It is paramount that you have adequate access to cash or line of credit throughout the entire season to capitalize on profit opportunities.  If you have doubts before the heating season, seek advice from a financial advisor.

Month-To-Date Budget Variance Reporting
Once your financial plan is in place, you must have a tool by which to monitor your DAILY progress, toward your month end goals. For those companies who do not budget, you are strongly encouraged to set goals for projected liquid product volumes and unit and extended margins, down to the product, trade class and price agreement level.  In addition, track service revenues by segmenting service sales into categories for service contracts, hourly billing and installations. Watch the unforgiving payroll expense line closely. Lastly, customer gains and losses must be considered in your plan-as it represents your anticipated future growth or attrition.

By keeping these categories in line and quickly adjusting your daily operations and margin targets for any bumps along the way, arrival at month end should be close your forecast.  Of course, that’s what we want

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