A Reliable, User Friendly Business Information System, Will Impress Prospective Buyers, And Support Higher Enterprise Value.

When your business information system works properly it provides you the information you need to make well grounded decisions. You can make decisions based on fact rather than on supposition or pure guess work. <<


One place to start as you develop your business information system is with the decisions you regularly make. Make the distinction between using information and using supposition. What hard information do you have? Where do you go on supposition but wish you had hard information?

Another approach, not separate from the first, but supplementing it, is in the area of cost/investment. If something is a big contributor to your monthly cost structure it is a pretty good bet you need hard information about it. So you need to collect that data and have it form part of your business information system.

Similarly, if you have a large investment in something, you will want to manage for the highest return on that investment. So you need to determine what information you need to make the needed decisions to achieve the desired return. And you need to make that information part of your system.

The world wide ocean shipping industry provides a good example of this. There, where each ship represents an investment of Tens of Millions of dollars, it is quite common for owners to have a manager responsible for the management of a single ship. These managers rely on the company's business information system to provide them with the information necessary to make informed decisions.

Keep in mind that information systems do not make decisions. If they did there would be little need for managers. All they do is collect the information, manipulate it in the ways that have been requested, and then provide it in the needed form to the appropriate people.

Then the people make the decisions. Although most of the decisions made have an ultimate financial impact, they are not necessarily financial decisions. They are usually operating decisions of one sort or another. And they are based on information provided mainly by your business information system, rather than your finance and accounting system.

Developing a comprehensive system for your business can add significantly to its value to a buyer. And before getting into why, you should be aware that although all systems share some similarity, systems do vary depending on industry, and business size. So your system should be specific to your business.

The reason that buyers will recognize this value is that it gives them confidence. Confidence in knowing that the decisions that they will be called on to make will be supported by hard information, rather than a gut feel developed over many years in a particular industry. They will be able to hit the ground running when they take over management.

It will give prospective suppliers of capital confidence. They will feel better about their investment knowing that hard information can support decisions by someone lacking specific industry experience. A good business information system will supply information that can substitute in part for industry experience. And making them comfortable with new ownership will make the transaction go more smoothly.

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