Fernando Labastida, communications specialist

As a business owner or operations person, you may be considering empowering your employees with information tools to enable everybody in your enterprise to make intelligent decisions while on the front-lines of your business. You’re convinced that micro-management is bad, and that a democratic workplace is good.

We agree. In our recent post Business Intelligence Software: Who Is It Really For?, David Abdo argued that business intelligence software should  not just be for executives, but for front-line managers and employees as well.

This idea, known as pervasive business intelligence (PBI) as been covered in many articles, such as this one by Information Management, or this one by data integration powerhouse Informatica.

However, BeyeNetwork blogger William McKnight, in his latest article Evasive Pervasive Business Intelligence, questioned the viability of every employee having access to Business Intelligence applications.

McKnight mentions different levels and interactions with data in the forms of either BI tools or reports, and states:

At some point in this hierarchy, the need for actual BI tools stop.

I find this a little contradictory. So if the culture that arises from “…sharing, and possibly decomposing the KPIs to multiple levels” empowers employees throughout the organization, as McKnight says, then why does he also say that everybody gaining access to BI tools may not be the best use of resources?

The availability of cost effective Software-as-a-Service (SaaS) BI tools changes that equation. If it becomes less and less expensive to provide every employee with BI tools, what’s the harm? Isn’t it better for everyone to conceivably have it than just providing reports to some and BI tools to others?

Fifteen years ago only sales executives and other professionals used cell phones (remember the big clunky brick phone?). Now, everybody has cell phones: the janitor, the receptionist, your grandma, your kids.

Who would have thought your kids needed cell phones? Now they need it in case of an emergency, or so you can keep tabs on them at every moment.

If it’s cheaper for everybody to have access to BI tools, and it can help the sales person sell better by seeing how she’s doing compared to her peers, or if it can help the support rep do better because he’ll spend his time resolving support calls more efficiently, then let them have the tools!

Not just a report. The tools.

What do you think? Am I way off base here?

You can sign up for a free trial of KPI Online’s Business Intelligence tool below, or explore the rest of the site…

Continuing the series on fast growth companies or “gazelles,” in the previous post I discussed what a gazelle was and what three aspects of a company determined whether you are a gazelle or not.

In this post I continue to dissect Javier Murillo’s article to discuss the two axes of the gazelle “chart.”

How Does Your Company Compare to Others?

Technology companies have several resources to show them where they stand compared to others. For example, Gartner’s magic quadrant provides technology companies in dozens of industry sectors with a graphical display of where they are vis-a-vis their competitors.

How can you determine where you stand?

Source: Axeleratum

Murillo has devised a very useful tool that enables every small and medium-sized business to quickly determine where they stand vs. others in their industry and market. The above tool helps you determine where you are on the fast growth continuum.

From our previous article, “Are You a Fast Growth Company?“, we showed how a fast growth company, or gazelle, is determined according to how it’s doing on three fronts: revenues, profits, and sustained growth.

Each of these, in turn, can be measured along two axes.

1. The Structural Value Axis

Basic. The company possesses only the very basic structural value inherent in the fact that it is a company, but it’s not aware of the potential impact of formal processes on the business.

Established. The company understands the impact of business processes, but has not established planning in the areas of strategy, tactics, and metrics.

Advanced. The company understands the impact of business process, and has full dominion of these processes through proper planning in strategy, tactics, metrics and has given ownership of these processes to key personnel.

2. The Relational Value Axis

Information. At this stage the company has control of information, data, messaging to it’s internal and external audiences.

Relationships. This stages represents the next level, where information is optimized.  The company provides the tools to establish relationships that provide mutual value and trusted bonds between both internal and external audiences.

Collaboration. This stages represents the final level, where information and relationships are optimized. At this stage, two or more people or organizations can create alliances, both internally and externally, to achieve mutually agreed upon goals.

These are represented in the above graph on a vertical and horizontal axis. Companies that move upwards and outwards towards quadrant nine are those that are the most advanced in their growth towards being a fast growth company, or gazelle.

With this tool, Murillo hopes to help companies determine where they are exactly, relative to other companies in their industry and region, in their quest to become fast growth companies. As a result, they can isolate what they need to work on to get to quadrant nine.

In the next article, we’ll discuss a plan you can take to become a fast growth company.

Fernando Labastida, communications specialist

What’s a “gazelle”?

How do you know if you’re a “gazelle”? Does it just mean growing your sales quickly? What does “gazelle” even mean? What about this definition:

Gazelles are companies that display rapid growth, or a potential for fast growth, that have institutionalized and professionalized, in an orderly and continuous manner, the transfer of the intrinsic value of their human capital into it’s structural value, and at the same time strengthens both by managing it’s relational value for the co-creation of value in a sustainable and scalable manner. A gazelle enterprise is one that, despite it’s size, is a good candidate for being acquired by another company, thanks to its structural and relational value, present and future.

That’s the definition of fast growth companies, or “gazelles”, by Javier Murillo at Axeleratum, a business accelerator out of Mexico City.

Breaking it down: the body parts of the gazelle

According to Murillo, a gazelle is determined by how a company is doing on three fronts: revenues, profits and innovation.

1. Revenue Acceleration: how can I sell more?

The capacity for a company to grow sales above the industry average over a sustained period of time, based on it’s business structure (processes and methodologies) and business relationships (internal and external).

2. Profit Acceleration: how can I make more?

The capacity for a company to maintain it’s profitability above the industry average over a sustained period of time, based on it’s financial and structural operations (processes and methodologies) and financial and operational relationships (internal and external).

3. Sustained Acceleration: how do I differentiate myself?

The capacity for a company to maintain it’s capacity for innovation and growth above the industry average over a sustained period of time, based on a deep understanding of their industry (real and potential), and supported by a structure for innovation (processes and methodologies) and innovation-oriented relationships (internal and external).

In the next post, we’ll look at the different stages a company can find itself on a “gazelle axis,” both structurally and on the basis of it’s relationships.

Fernando Labastida, communications specialist

As the owner or executive of a business, you have business goals. You have your 5-year goals or your long-term goals, and then there are steps along the way to reach those goals: medium-term goals and short-term goals.

If you were a retailer you might have the following goals:

Short term: sell a certain amount each sunny day, a certain amount each rainy day, a certain amount each holiday, weekend and weekday.

Medium term: Identify your best suppliers. Establish relationships with the most efficient, timely, reliable and innovative suppliers. Attract a higher number of baby boomers than your competition.

Long term: Continue to create innovations in the marketplace that can set you apart from your competition, such as innovative loyalty programs or bleeding edge point-of-purchase technology.

In business planning and business performance management, key performance indicators (KPIs) are fundamental to knowing where you are in your path towards a certain goal.

This is what Wikipedia says about KPIs:

A performance indicator or key performance indicator (KPI) is a measure of performance.^[1] Such measures are commonly used to help an organization define and evaluate how successful it is, typically in terms of making progress towards its long-term organizational goals^[2]. KPIs can be specified by answering the question, “What is really important to different stakeholders?”

Wikipedia mentions long-term, but that misses out on important short-term and medium-term goals which I’ll explain shortly. The other key term here is “stakeholders.”

Each goal, whether short-term or long-term, has different stakeholders.

If you have daily retail sales goals, then a store manager has to have access to data that shows him or her in real time what’s going on in the store.

If you have quarterly or yearly goals vis-a-vís your suppliers and different customer segments, then an operations person or sales director needs access to information that shows how you’re doing along these paths.

If you have long-term plans to create innovative solutions and become a market leader, then the CEO or owner needs access to key data to know how you’re doing against these plans.

Different time-frames, different stakeholders, different goals, different KPIs.

What tools are available to help you along the path?

David Abdo wrote a post entitled “Business Intelligence Software: Who Is It Really For?” where he argued for the democratization of business intelligence software across the enterprise.

The existence of a multi-tiered goal structure as illustrated above implies the requirement of a company to implement a business intelligence tool that’s accessible to all people within the company.

What are your thoughts on the matter?

For more information on how to implement a business intelligence tool to navigate your way towards your goals, click here to sign up for a free webinar!

Fernando Labastida, communications specialist

With the good news that retailers are increasing their IT spending, I thought I’d give a brief overview of how smaller and medium-sized retailers can improve their performance with business intelligence tools.

As a small or medium-sized retailer you face many challenges, not the least of which are increasing competitive pressure from superstores such as Wal-Mart, from smaller niche players, Internet-only Ecommerce sites, and many more.

You can start a social media marketing campaign, as that’s a good low-cost way to improve your marketing reach.

However, you can also do some really cool stuff on the back-end that can make you more competitive.

With low-cost business intelligence applications here are some of the things you can do:

1. Institute a loyalty program

When you institute a customer loyalty program you can track and identify your best customers, and at the point-of-purchase reward them for their business.

2. Stay on top of your vendors

During the critical Christmas selling months of November and December you do NOT want to be caught without a key popular item. Analyze your suppliers’ past performance and make sure you stay on top of those that have been late in delivering to you in the past.

3. Monitor the sales floor in real time

If you set daily sales goals, you can monitor sales in real time through-out your store or multiple stores (if your POS systems are connected in real time to your HQ). At various times during the day you can see how sales are trending. If by performing trend analysis you can see that sales for that day will not meet your daily sales goal, you can take immediate mid-day action, such as instituting a promotion, setting up a Point of Purchase Display, instruct sales people to sell ad-on items, etc.

4. Order more popular items

By tracking and analyzing sales data and inventory, you can identify the items that are selling well and buy more of them, as well as do creative things like create a special promotion for that item.

5. Get rid of unpopular items

By tracking and analyzing sales data and inventory, you can identify slow moving items that are just gathering dust in the warehouse. Stop ordering those items sooner than you normally would to cut costs.

What else can you do? Leave me a comment below with more ideas on what you can do with a business intelligence tool to increase your competitiveness, gain more customers, or cut costs.

To find out how easy it is to do this, attend one of our free weekly trainings!

Fernando Labastida, communications specialist

Clichés explain the need for business performance

Did your mother ever tell you things like: “you are what you eat,” “Hindsight is 20/20,” and “If you fail to plan, you plan to fail”? Well maybe she told you the first one, and perhaps you heard the 2nd one in school, and maybe the last one you heard from your first ever business guru that your company hired to motivate everybody.

These three phrases seem like clichés, but they describe why your company needs performance management.

1. You are what you eat

David Abdo, KPI Online’s CEO, is fond of telling us that what is happening to your business today: your cash and inventory situation, your profitability, accounts payable, accounts receivable, sales, customer base, situation vis-a-vis the competition, are all a result of decisions you made 1, 2 or even 3 years ago.

2. Hindsight is 20/20

With a proper business intelligence tool, you can see that where you’ve been has taken you to where you are now. You can visually track all the trends related to all your key company metrics and know exactly how you got into the mess state you’re in now.

3. If you fail to plan, you plan to fail

When you see where you’ve been, you can see that you didn’t really plan to be in the soup you’re in now. It just sort of happened.

Performance Management: A GPS for your company

Now small and medium-sized businesses have no excuse not to institute a performance management culture in their businesses if they want to grow quickly, steadily and profitably.

Nenshad Bardoliwalla, who was recently CTO for Enterprise Performance Management (EPM) and Governance, Risk and Compliance (GRC) at SAP, clearly explains what performance management is in his blog post “Driven to Perform: Unifying Performance, Risk, and Comliance using the GPS Metaphor.”

In this discussion of his recently published book “Driven to Perform: Risk-Averse Performance Management From Strategy Through Execution,” Bardoliwalla uses the GPS metaphor to describe performance management:

Modern performance management does the same thing as a GPS system by helping companies define direction in a precise way, by providing the means to communicate and propagate a detailed understanding of the way forward, by looking ahead to what the likely outcomes are with predictive models, by looking into what is happening in the business network, and by expanding and deepening awareness of the direction of the employees, partners, and key stakeholders.

All this can be done by combining tools that are now readily available to small and medium-sized businesses, such as SaaS Business Intelligence tools, an awareness of compliance issues and risks your business faces, Bardoliwalla’s book, and your willingness to implement a strategic plan, monitor how your company is meeting it’s objectives, and adjust along the way.

Don’t fall victim to clichés anymore. If you’d like to know more about how to implement the tools to measure how your company is doing in it’s performance management objectives, attend one of our weekly free webinars!

By Tracy Fabian, Pre-sales engineer, and Fernando Labastida, communications specialist

What you don’t know will hurt you

Imagine you’re the owner of a successful wholesale company that’s been growing really fast. Large and small retailers are beating a path to your door to buy your product. Things are looking great. You’ve predicted sales are going to grow by 50%, so you plan purchases of your supplies accordingly.

All of a sudden, a year goes by, you don’t have any cash to pay next month’s payroll and your warehouse is full of unsold items.

This situation hits you like a ton of bricks, from left field (sorry, I can’t think of anymore clichés to add to these two). What happened?

You didn’t realize that while sales were only growing 20%, your inventory was growing by 50%. You lost track of your numbers. A situation similar to this happened to a client of our friend Ken Kaufman of CFOWise. Listen to it here on this podcast:

Situations like this happen to hard-working entrepreneurs throughout the world. It’s probably happened with your business, your labor of love. You’ve busted your tail to build your company from scratch. You’ve worked 10-15 hour days, surviving literally on fumes. Your company has gotten to where it is today based purely on the strengh of your will and your vision for the future.

But now that you’ve reached a certain level of success, you’ve plateaued. Cash flow and profitability still seem elusive. Customer service calls are on the increase. Your inventory is stacking up. Your kids are wondering when they’ll be able to take that big vacation to Costa Rica you’ve been promising them “when we’re successful.”

But you’re still working as hard as ever.

The problem is, things are moving so fast that you don’t know the basic numbers of your company. Despite the warnings from your accountant, you can’t find the time to sit down and really figure out what the numbers are telling you. You’ve got another proposal to write, a negotiation with a new vendor, and a new marketing campaign to kick off.

That’s where Business Intelligence comes in.

You can’t improve what you can’t measure: the case for Business Intelligence

The entrepreneur’s dilemma is that the skills that got you where you are today are not the skills that will help you grow into a viable, sustainable business that doesn’t need the “indispensable you” to operate it on a day-to-day basis.

What helped get you where you are today is your passion, hard work, salesmanship, marketing savvy and unshakable vision for your business, yourself and your family.

What will help turn you into the next Inc. 500 company is to know what the numbers are on every aspect of your business so you can stop bad habits, improve good habits and institute new habits for growth.

These numbers have to be at your and your employees’ fingertips at all times. They’ve got to become part of your company culture.

Basic numbers such as:

1. Revenue.

Track revenue, cost of sales, gross profit, gross margin, revenue trends, sales per sales executive, top 10 products, sales by region, sales per customer, etc.

2. Expenses.

Track payroll, utilities, travel, actual expenses vs. budgeted expenses, expense trend analyses, expenses by cost center, expenses by type, etc.

3. Inventory.

Track inventory days left, inventory by product, fastest moving inventory items, slowest moving inventory items, overstocked items, etc.

4. Accounts receivable.

Track expected payment schedule, fast pays, slow pays, payment trends, etc.

5. Accounts payable.

Track past due payments, categorize vendors by payment terms, check payable trends, determine who to pay first and who you can delay payments to, etc.

6. CRM data.

Track details on sales reps, best customers, worst customers, customer complaints, customer loyalty, defections, referrals, etc.

7. Human resources.

Track vacation days, employee efficiency, employee complaints, employee retention, compliance, etc.

This is by no means a comprehensive list. Here are more things that you can track in order to grow:

• Technical support calls: time to resolution, issue tracking, common complaints, favorite features.
• Route driver efficiency: miles driven, time taken for delivery, time per customer visit, on-site invoicing.
• Product optimization: most popular products, least popular products, most profitable products, least profitable, product returns
• In-store sales: most profitable days of the week, most popular specials, least effective specials, most effective point-of-purchase displays
• Logistics: best delivery companies, slowest delivery companies, number of lost items during shipping, number of broken items
• Medical: most expensive procedures, most profitable procedures, most complicated procedures, procedures requiring minimal skill
• Software development: developers producing most bugs, most efficient developers, best development environments
• *insert your urgent items needing measurement here*

Keeping it simple

Have we lost you yet? Still here? Good.

Now you know what you need to know to take your company to the next level.

But the big question is: who has time to analyze all this? Who has time to organize all these numbers into spreadsheets and try to figure out the best way to organize the data? Your accountant? Maybe…

What about a simple-to-use Business Intelligence tool?

The terms dashboards and analytics are often cavalierly tossed around as terms associated with Business Intelligence, but here for the first time a brief explanation:

Dashboards are tools to visually display data such as Performance Indicators and Key Performance Indicators via tables, charts, graphs, etc.  Dashboards allow you to customize what is displayed or you can build them from scratch with the information you want to see. Dashboards also allow you to “drill-down” into the data, such as viewing revenue by region, department, product, and sales executives, for example.

Analytics is the practice of looking at historical data to gain insight and understand business performance.  Through analytical capabilities, users can dissect business data to fully understand and answer the “how”, “what”, and “when” questions.   You can in turn use this data to plan the best performing mix of products and special offers, for example, and predict with accuracy what the outcome will be.

Sounds complicated, right?

Here’s the beauty of dashboards and analytics: they’re now available in pre-built, easy to use visual displays. With simple point and clicks, you and your employees can actually see how your products or expenses are trending.

Click on certain interesting metrics to drill down and find out: which customers are really slow pays? Who are my top 5 hot-shot sales guys? What was my best retail sales day and why? What was the actual product that sold the most that day?

You want to see how things are different now than they were, say, 3 months ago? View a visual time-line to see how your expenses or inventory figures are trending. Want to urgently correct something that you didn’t know was going downhill, fast? Start a project with your BI tool that will shoot off emails to your people to take immediate corrective action.

How to get the info into the tool

Ok great, now I can see all my company’s data visually, and it doesn’t take a rocket scientist to figure out how to understand the numbers. I can see where I’m bleeding red ink and I can take action (you like taking action more than you like crunching numbers).

But how do all those numbers get there?

Glad you asked.

Most BI solutions today have simple tools to help you with that. There are Extract, Transform and Load (ETL) tools that can connect directly to your accounting system or CRM, providing a tunnel for your info to get from one place to another on a scheduled or manual basis. There are also excel templates so that when you export the information from your accounting system you can organize them into the right columns with the right column headers and then upload them into your BI tool.

It wasn’t always that way. As little as 3-4 years ago these kinds of tasks required highly paid data analysts who were experts in databases, data integration tools, and DTS scripts to get the data from point A to point B. As a matter of fact, it used to require these gurus to build the reports and dashboards you needed to actually see the data that would be useful to you. Ugh!

You’re actually lucky you’re in business now. A lot of blood, sweat and tears have been shed to make these tools easy for small and growing businesses to use, and affordable.

Cost of BI tools

Sounds expensive, doesn’t it? Well yes, it was.

Traditionally BI tools were reserved for the Fortune 500 and just below. They really needed tools to keep their upward growth trajectory (and some of them didn’t do a very good job. Maybe they spent too much on their BI solution???). They were complex, the tools were expensive and unwieldy, and the implementation took a long time and sometimes cost more than the tools.

But now BI applications are essentially websites. You use websites to run your business. If you use Google Analytics, then you’re using the simplest, most commonly used BI tool delivered on a Software as a Service (SaaS) model. SaaS really means software that’s a website.

The advantage of using BI tools, or any software for that matter, delivered as a SaaS, is that the cost can be broken down into easy to consume monthly payments. All the maintenance costs and hosting are absorbed by the software vendor.

Literally for the daily price of a Latté you can have access to a web-delivered, powerful tool so you can measure all your company’s key numbers and get a handle on your business. You can focus on growth, and empower your employees to check on important company metrics and take corrective action if necessary.

Conclusion

What does this all mean? It doesn’t mean anything without you, the entrepreneur, and your growing business. Business Intelligence is for the hard working men and women who operate small and medium-sized businesses to help them grow into medium-sized and large businesses.

What are your next steps?

We’ve given you a general overview of what Business Intelligence is, and how it can help give you back control of your life and your company. Now you’ve got to take the next step. Try it out. Click here to try out our basic model for free. We won’t ask you for too much personal information, your dog’s immunization records, and what magazine you’d like to subscribe to.

If you get stuck you can always click “Help” from within the Log-in area, or you can call Tracy at 571-643-5575, or email her here: tfabian@bitam.com. She’s real friendly, honest!

Additional reading: How to Work On Your Business, Not In It.

Business Intelligence: Who is it Really For?

Fernando Labastida, Communications Specialist

So maybe you’ve survived the recession up till now without having to make any cuts. You’re either lucky or you’re from Texas.

Well never say never.

When things get tough, real tough, you have to cut expenses. What’s the first thing most businesses think of when they want to reduce their expenses so they can survive another quarter? The largest expense category on the books: labor.

But not so fast: you may be cutting valuable muscles and brains.

In a recent article, Rodrigo Rosas from Axeleratum wrote a blog post about “How to Cut Costs Without Affecting Company Operations.”

1. Take a look at the big picture

Literally climb a ladder and look at all your expenses, either using your income statement or using your business intelligence tool, so you can identify what your biggest outflows are.

2. Classify expenses into indispensable and dispensable

After identifying all your expenses, now separate them out into indispensable and dispensable. Rosas says there is only one criterion by which you need to categorize your expenses in this way: whether by cutting a particular expense your company can continue as a going concern or not. Classify the expenses that affect the viability of your company as a going concern as indispensable.

3. Classify the impact of the indispensable expenses

Rosas says the above table is a key tool to categorize these indispensable expenses.

The impact of each expense is measured considering how long your company can operate without spending a dime, and alternatively what would be the impact of not cutting that expense (from temporary suspension of company operations to complete liquidation).

At the same time, classify those for which you have the ability to negotiate a delay of payment (credit) and those for which you can’t. This will provide you with the clarity to focus on resolving your situation in the most timely and effective manner.

Using this matrix, Rosas says, focus on solving the “A” expense first, the one with the biggest impact on company operations and for which no credit exists. Successively go down the list, from B to F.

With these three steps you are able to take a more objective approach when it’s time to “cut the fat.” It won’t be an easy task Rosas says, and he recommends getting outside help. But it’s got to be done.

Rodrigo Rosas Ventura, special contributor

Everybody has, at one time or another, sold a product or a service.  That product or service was either sold at a loss or at a profit. But here’s the rub: many of us don’t know if we’ve actually made money on that sale or lost money.

Many companies focus on staying afloat, sacrificing financial viability in favor of surviving day to day. This situation may not seem so bad in the short term, but when it eventually manifests itself it maybe too late for the business’s survival.

Let’s look at some financial concepts first before looking at how to turn this situation around.

What is a ‘cost’?

Cost is the outflow of cash used in the direct manufacture of a product or in carrying out a service. For example, if we manufacture jeans, our costs are the materials used to make the jeans, such as the cotton, the zipper, the labor.

In other words, the sum of the parts and effort to actually produce something.

What is an ‘expense’?

This is the outflow of cash to keep the business going. Though very important, expenses are not reflected directly in the product we produce.

Expenses are critical to keeping the doors open, such as rent, utilities, transportation. They can be virtual, such as the depreciation of your machinery or other capital goods. There are other very important expenses as well: management and salespeople.

What would we do without salespeople selling our products?

So the big question is: what’s the difference between a cost and an expense?

Good question.

The fundamental difference is: cost can be recovered, an expense is gone forever.

How to determine the cost of your product or service

Based on this important distinction, I propose a methodology, a recipe if you will, to determine the true cost of your product or service.

1. List all the ingredients used to make your product.

These are also called raw materials, and there are two types:

• Direct raw materials. These are the materials that are an obvious part of a product. For example, to make a pair of jeans you need so many yards of material, a button, a zipper.
• Indirect raw materials. These are also used to make your product, but they’re hard to quantify, such as the glue used to make shoes.

2. Quantify the raw material

• Direct: we would use a standard measurement for each piece that we manufacture as these are easy to quanity.
• Indirect: we quantify the cost used to make a certain number of units, and divide the cost from there. For example, if we use a 20 lbs. drum of glue to make 100 pairs of shoes, and that drum costs $20, then we divide the cost of the drum by the number of pairs of shoes.

3. Quantify the cost of labor

This is another basic concept: quantifying how much labor is used to make each unit. The standard way of doing this is with the famous ‘time and movement’ study. Essentially, using a timer, measure how long it takes the worker to make something, multiply that by the units made in a month, and divide his or her monthly salary by the monthly unit count.

So taking the shoe manufacturing example again, if a worker takes 10 minutes to work on each shoe, that’s 6 shoes per hour or 40 per day. If the shoe maker earns $4,000 a month, and there are roughly 20 working days in a month, he or she would be able to make 800 shoes. In other words, the labor cost for making each shoe would be $5.00 per shoe.

4. Distribute expenses between the pieces manufactured

Add up all the expenses to keep your business open (utilities, rent, maintenance, etc.), and divide them between the total number of products manufactured. So in our shoe example again, if we have expenses of $10,000, and we make 200 shoes, then expenses become a cost of $50 per shoe.

5. Add all the costs and expenses

Adding the costs of raw material, labor, and expenses per unit, you get the true cost of each item you produce. If you follow this recipe for each product or service produce, voilá, you now get the true cost of your product, and you can now determine whether you’re losing money or making money.

What can we do with this true unitary cost? We’ll talk about that in a later post.

This post appeared originally at: http://axeleratum.com/blogs/27-in-the-money/1202-icomo-costear-un-producto-o-servicio-en-cinco-pasos

Rodrigo Rosas Ventura is a consultant and blogger at Axeleratum. He writes about finance, trying to demystify it and de-jargonize it so it’s not such a confusing topic.

Additional reading:

Pay Sales Staff For Gross Profit, Not Sales – Ken Kaufman, CFOWise

Inventory basics for small businesses – Becky McCray, Small Biz Survival

Company Financial Health: Not Just Revenue And Expenses

In today’s economy, it is imperative that organizations track the financial status and health of their company.  It is not enough to only track cash or revenue coming into the company; you also need to track what is leaving the company.  Just as important, if you are an organization with inventory, you need to be able to tell quickly how much money you have tied up in inventory and what products are moving the quickest vs. what products are sitting on the shelves.

KPI Online provides a collection of more than 15 pre-built Business Intelligence (BI) models via a Software as a Service (SaaS) platform to assist you in analyzing the financial status of your organization.  The full basic model includes dashboards and analytics to monitor and analyze Revenue, Expenses, Inventory, Accounts Payable and Accounts Receivable data.  Also included in the KPI Online service is a free database connector capable of connecting to the most popular ERP systems such as AccountMate, MS Dynamics NAV, SAP Business One, etc.

The main KPI Online dashboard provides an overall summary of your organization.  A 12-month trend graph depicting Expenses, Cost of Sales and Revenue allows you to view past trends for these key performance indicators.  By monitoring and analyzing past trends, you can begin to predict future trends.  Also included on the summary dashboard, is a mini Profit and Loss table where you can view metrics such as Revenue, Gross Profit, Gross Margin, Net Margin, Expenses, etc.  You also have a summary of Accounts Receivable and Accounts Payable data.

Outside of the main summary dashboard, there are 15 additional dashboards to assist you in further analyzing the financial status of your organization.  Dashboards such as the Sales Executive Analysis, Top 15 Customers, Expenses by Cost Center, Cost of Inventory and Best / Worst 25 Products all enable you to ensure the health and viability of your company is excellent in all areas.

KPI Online also provides drill-down capabilities allowing you to fully understand why your company is performing as it is.  In order to plan properly, Executives and Managers need to know more than just what the bottom line number is, they need to know how they number was obtained and how to improve upon that number. Dissecting the data and drilling down to various business levels provides this information.

Interested in learning more?  Sign up today for a free 30 minute webinar on the full basic financial model, register for a free 45-day trial or contact us directly at saas@bitam.com.

Webinar:  http://kpionline.bitam.com/kpi_eng/registerwebinar.php

45-day trial: