The Economic Importance Of The Home Based Business Industry

DEFINING THE HOME BASED BUSINESS

The home based business can be defined as a business whose primary office is in the owner's home. The business can be any size or any type, as long as the office itself is located in a home.

In the USA, there are about 6.6 million home based businesses that generate at least 50% of the owner's household income.(a)

"If one advances confidently in the direction of his dreams and endeavors to live the life he has imagined, he will meet with success unimagined in common hours." - Thoreau

ESTIMATES OF THE TOTAL SIZE OF HOME BASED BUSINESS

"One study has estimated that the total number of people who run or are employed by home based businesses in South East England is in excess of 250,000 people, equivalent to 7% of the working population of the region.(c)

"While the average home entrepreneur business has two employees (including the owner), 39% have between two and five employees, and 10% have more than five. Using these average employment numbers, Emergent Research estimates that home entrepreneur businesses currently employ roughly 13.2 million Americans, including the owner.(a)

"To put these figures in perspective, let's compare them to U.S. employment generated by two important industrial segments: venture-backed firms and the oil and gas industry. Analysis by the National Venture Capital Association shows that companies that received venture capital backing including such corporate giants as Intel, Microsoft, and Apple - employed 10.4 million in 2006."(a)

THE IMPACT OF THE DEVELOPMENT OF THE INTERNET ON THE ECONOMY AND HOME BASED BUSINESS

The development of the internet has been and will be the big driving force in the development of the internet related home based business. Let us have a closer look at these developments. The following information is extracts from the McKinsey report.(b)

Two billion people are connected to the internet. This number is increasing by about 200 million per annum.

Almost $8 trillion exchange hands each year through e-commerce.

About one-third of small and medium-sized businesses extensively use web technologies.

The web has made possible new waves of business models and entrepreneurship. It has transformed industries.

The internet accounts for 3.4% of the GDP of the 13 countries that was part of the study. These countries represent 70% of the world GDP. The total contribution of the internet to the world economy is $1 672 billion or 2.9% of the total GDP.

The internet accounts for 6% of the GDP of countries like Sweden and the UK.

Over the past 5 years, the internet has contributed 21% of the GDP growth of the 13 countries that were studied. These countries represent 70% of the total GDP of the world.

This is a reflection of the small and medium-sized enterprises receiving a performance boost through the internet. These companies with a strong web presence grew more than twice as quickly than those with a minimal or no web presence.

The internet has become a very significant factor in the world economy and the growth of the economy. More specifically in jobs and wealth creation.

Online marketing represents 15% of total marketing worldwide.

The search requests by individuals on hard-to-find items or information was a total of 1 trillion requests during 2009.

In the USA, web surfers made purchases worth $250 billion in 2009; in the UK, it was $63 billion or 2.9% of the GDP. The average online shopper in the USA has spent $1 773 during the year. In the UK, $2 535 was spent on average.

The study concludes that the influence of the internet on the economic growth in the world, on job creation and generating wealth, is becoming more important and stronger.

For individual companies the internet lowers costs and increases revenue, productivity and profits. The internet helps these companies to accelerate growth in the export markets and to have access to new markets.

The introduction of broadband stimulates the development of the internet in those countries where it is being introduced. The internet stimulates growth in GDP, in job creation, wealth, and increases productivity.

In France, the internet has created a total of 700 000 jobs during the past 15 years.

The research of McKinsey indicates the growth in people connected to the internet, the importance of doing business via the internet, and the big influence that these new technologies have on the GDP of the world economies.

THE INFLUENCE THESE DEVELOPMENTS HAVE ON MY HOME BASED BUSINESS

Accurate research information is not available about the expected growth in the online home based business industry. I want to make some estimates based on the information discussed above:

The annual growth in people connecting to the internet is growing with about 10%.

The ability of the internet to:

Create new jobs. Give people an extra income stream. Have their own home based business and being self-employed. These changes create many new business opportunity.

The new technologies related to the internet will create new business models that will stimulate opportunities.

More and more trading and marketing is being done via the internet due to the development of new systems and technologies.

The improved communication systems and technology makes it cheaper, less risky, and more attractive to start a home based business.

The influence of the development of the internet on the growth in the GDP of the countries in the McKinsey study has been higher during the last five years than during the previous fifteen years. The trend is upwards. Many of the conclusions in this study indicate that the influence on economic growth in the future will be higher than in the past. Some developed countries like the UK have a more people using the internet than others, for example the USA. That indicates growth in many of the developed countries.

Due to the development and introduction of broadband in the less developed countries of the world, new trading and business opportunities will become available.

There is a trend that more people who want to work from home, as indicated by the following quote: "Nevertheless, home based business owners are much more satisfied with their quality of life than other small business owners. However, the majority of home based business owners do not appear to have made a financial trade-off in order to secure this quality of life."(c)

These new technological developments, the changes in the economic environment and changes in the social needs of people will result in a higher growth rate in internet related businesses, as well as in online home based businesses, than the 10% annual increase in people becoming connected to the internet during the next few years. If one takes into consideration that the average growth in the GDP of the world is expected to be much less than 10% per annum during this period, then there has to be good business opportunities here.

Designers Don't Build A Web Business

Who makes your business?

Does the builder of your office make your business work? Does the sign company make your business work? We would never suggest that any business is successful except for the efforts of the owner/entrepreneur, but when it comes to web sites we think differently.

Why would we think that a web designer will build us an online business? Just because they say they will make your site stand out in a crowd? Just because they say they will drive traffic to your web site?

Maybe.

Maybe we believe the marketing hype because we want to, and we want to because we don't have the technical know-how to make our own web site. Well, we don't have the building skills to construct our own office either and that never stopped us from building our business.

The lack of technical know-how is no reason to hand over control to a web designer who knows nothing about our business or the market we serve. In fact it is downright dangerous and costly to follow a web designers ideas about building a web business.

What does a web designer know?

A web designer, having graduated from a college course in web design, knows how to build a web site. They do not know how to build a business. And this is where most of us get off track. We think that once the web site is designed then we are in business.

Compare this to buying an automotive repair shop with the hydraulic lifts and compressor, the work bench and office, and we would call this a working auto repair shop - but it is not an auto repair business until WE make it so.

We accept the recommendations of web designers and web marketing people and then believe that that is all there is to running a web business. The experts sold us a working web site, not a working web business. In fact, they didn't sell us much of anything at all.

A custom web design in the digital virtual reality is something of a laugh because nobody starts from scratch, at least not for us small business guys. And that is not going to change, but maybe we will realize when we are paying too much for recycled ideas and copied code.

You are the business

After our web design has been built the biggest part of making it a business is yet to come. After the web experts have been paid all we have is a shell, just like the auto repair shop. Everything works and functions just fine, but there's still no business for our new web site.

Unfortunately, if we had listened to the web designers we would have filled our web pages with filler and not real content. Filler is just a bunch of talk about our products or services and what a great business we are and why everyone should buy from us.

Who really believes what a company says about itself? Why would anyone, even in the market, care about filler that is very suspect?

We have been tricked

While we have been following the logic of web designers we have missed the shear genius of our own information. We have been tricked into thinking only about ourselves instead of thinking about our market. And it is not just the web industry that tricked us this way - it is old school offline marketing & advertising that tricked us first.

Putting the focus on our market is both the heart and brains of a business web site. We must first put our knowledge and experience for solving problems into the business and then we must talk to our web market as though we know them by name. And we do know them by name when we address them as a group of like minded people.

Standing apart

If we were to put our clients first and speak to them about their problems and how we can help to solve those problems then we would be one of the first small business web sites to do so. Our web content would be very different from any of our competitors. Our keywords would be more specific to the problems we solve. We would be giving our market what they really want and our web marketing costs would drop like a stone.

If we were to ignore all the experts in the web industry and paid full attention to our market there would be a big shift in how we did business. This much is pretty obvious and it's hard for us to deny the value of communicating directly to our market with what they want to know. But, it's hard not to shake with a little fear about wandering away from the comfort of doing what everyone else is doing.

2 Considerations

#1) If our web designer didn't build us a web business, then they haven't build anyone else a web business. What this means is that by being true to our business we have no competition.

#2) The risk in financial costs of attracting our real web market is tiny and the time it takes to build this into a business is less than the time we have already spent spinning our wheels and listening to others.

To make a web business happen we need to be engaged with our market and not expect anyone else to make it happen for us. We can look for help and learn from others, but if we expect designers to build our web business for us it will just another cookie cutter web site as they do what they have been trained to do.

Funding Sources for Your Home Business

Funding your business is simple not easy. True it is easy to get money when you have a traditional business. You will find it hard press to get the banks to give you a loan for your affiliate, network, direct sales, or internet marketing business.

If you are a licensed professional like a real estate agent, insurance agent, or certified financial planners good luck on traditional funding sources.

This guide will give you 21.5 ways to funding your home business. Looking to raise between $500-$10,000? Then this is for you. You may want to offer top-tier products and get paid higher commissions. But you don't have the money to invest in your business to offer top-tier services. I give 21.5 ways to fund your business.

Here are 21.5 ways to fund your business:

Quick Funding Sources

1. Personal Savings: The simplest way to fund your home business. You are investing your personal savings into a cash flowing business that will give you mega returns. You must think like this to succeed. You are not spending your savings you are investing it.

2. The 3 F's: Family, Friends, and Fools. It's tricky borrowing money from family and friends. Especially if you have a history of starting and quitting businesses. If you have borrowed before and failed to pay it back you are up a creek. Then then are fools. There is someone out there who will give you money. I have raised over two hundred thousand dollars from friends, family, and fools.

Be sure to draw up a written agreement saying when you will pay the money back. Offer a high interest rate so the person will not feel like a "Fool" when they are giving you their money.

3. Credit Cards: Use your credit cards to get started. This is easy when you need less than $300 to start your business and becomes difficult when you want to sell top-tier products that pay higher commissions.

Use your credit cards or someone else. This is where the 3 F's come in again. I started my company, gave my friend 5% equity, and had her get business credit cards. I then borrowed $5000 for my internet marketing business. It took me 18 months to pay her back but now she gets her car note paid every month plus a nice dividend check at the end of the year.

4. Short Term or Payday Loans: If you have a job you may want to try short-term or pay-day loans. You can borrow up to $2500 with some of these institutions. This is high risk and make sure you are in your home business for the long haul. Their interest rates are atrocious.

5. Personal Lines of Credit: use your personal lines of credit from your bank. I prefer to use credit unions because they are a little more lenient and offer better rates. Plus they have favorable repayment terms.

6. Personal Assets: Borrow against your home, car, or stocks. Borrow enough to start your business and keep it running. Borrowing against your assets will keep you committed to your business.

7. Insurance: Cash out your insurance. This is how many entrepreneurs start. Check your policy's conditions on you cashing out.

8. Your Retirement Accounts: You can borrow from your 401k plans or IRA's. Just make sure you borrow enough to cover 3-6 months of business expenses. Most people only borrow enough for the start-up. They forget about marketing and fixed monthly costs.

9. Your Job: This is a slower process and sacrifices have to be made. Need to invest $5000 for your home business? Then save $500 for ten months. Saving a portion of your job income is a smart move because you will not owe anyone and your bills will still be paid. Plus you will have the time to learn your business.

Creative Funding Sources

10. Your Customers: Yes, your customers. You can pre-sell items to fund your business. I promoted marketing system before it was even launched. I sold a new blogging platform before it came to the market.

11. Partnered Up: When I started my real estate career I did not have the money for my license, Realtor dues, or investing. I partnered up with agents and sent them my clients. I got a referral fee. I took finders fee on distressed properties. This ides works well in certain niches.

12. Boot Strapping: You only invest the money you make from your business. This may be the only way to raise funds for your business if you have poor credit, no friends, or family who will lend you a dime. You may have to sell small items and upgrade when enough sales come in. The advantage of this is you are learning while you are earning.

13. Sell Your Crap: Yes your crap that stuff you don't need anymore that is taking up space. I have had several members of my team sell their cars, furniture, clothes, and other items to fund their home business. They used eBay, Craigslist, Back Page, and garage sales.

14. Mobile Advertising: Turn your car into a moving advertisement. Some companies pay up to $300 per week. You are driving anyway might as well get paid.

15. Sell Your Body: No, not like that. Sell advertising space on your body. Options include wearing signboards, t-shirts with company logos, or temporary or permanent tattoos.

16. Windfalls: Use your tax refunds, lotto winnings, settlements, and gifts. You can expand your business every year with your tax refunds.

17. Medical Research: I have a teammate who raised money by participating in medical research projects. This may be extreme but he got his money and has a profitable business. Search online for medical research projects in your area.

Non-Traditional Lending

In my membership site there is a training that teaches you to raise $500 to $10,000 in 30 days or less. Here are the funding source we teach:

18. Crowd Funding: is the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations. You can use crowd funding resources GoFundMe, Fundagreek, and Fundly.

19. Peer-to-Peer Lending: is the practice of lending money to unrelated people, or "peers", without going through a traditional financial intermediary such as a bank or other traditional financial institution. This lending takes place online on peer-to-peer lending companies' websites using various lending platforms and credit checking tools. Sites like Peerform can help you with this process.

20. Investor Loans: Lending Club and Prosper.com connect borrowers and investors. Borrowers get their funding and investors get a nice return on their money. Please check out these sites for more information.

21. Micro Financing: Micro Financing is a form of financial services for entrepreneurs and small businesses lacking access to banking and related services. Mission-driven lending organizations give micro-loans (between $500 and $50,000) to businesses not eligible for traditional bank funding.

Down Payments On Business Loans And Where You Can Get Yours

All small business lenders - banks, private lenders, alternative financing companies, SBA, etc. - have one major thing in common. They require some form of down payment.

Let's say that you are requesting an unsecured business loan from your bank. And, you are asking for $80,000 that you want to use to purchase some inventory and supplies as well as to bolster your marketing efforts.

And, your bank approves that request. However, they only approve 80% of your requested amount or $64,000. What?

Or, your business is in need of a new routing machine to handle your ever increasing customer load. The equipment costs $50,000. Your lender approves your request but will only fund $40,000 or 80% of what you need. Huh?

Or, your business has $100,000 in outstanding invoices just waiting to get paid by your customers. Yet, you have new orders coming in everyday that you just do not have the cash on hand to start or complete. Therefore, you approach an asset based lender or accounts receivable factor and ask for an advance on those invoices that will pay within the next 30 days. However, the lender will only fund 80% or $80,000 against those invoices - even though they take control of 100% of their face amount. Really?

Down Payments

Why do lenders require down payments? It all started with banks centuries ago. They determined, through trial and error - mostly error - that if a borrower were to put at least 20% down - have 20% of their own money attached to the loan - then they are 80% less likely to just walk away from that loan should the going get tough.

Thus, they determined that 20% in a down payment was both enough to better ensure that their borrowers will repay those loans - the one thing they want the most - and that 20% was enough of an amount (high and low) that only serious borrowers would and could be able to raise that amount.

In fact, when the government got involved in the banking and lending industries, this down payment figure of 20% was one of the first things that they agreed on as a standard practice and now hold these lenders to that standard.

Bottom line is that having a down payment in nearly all lending - mortgage loans as well as business loans - is now the standard and is already calculated in their underwriting process. Thus, you request a business loan for $100,000 - the lender already marks it down by 20%.

Now, leave it to the SBA to throw a wrench into this discussion. The SBA has a business loan program - their 504 loan program - which helps local small businesses finance commercial real estate or business equipment in their local areas. These loans are secured - 100% - by the real estate or equipment. Thus, with this specific loan program - this secured loan program - the SBA lowered its down payment requirement to 10%. Still a down payment but less of a burden on the borrower.

Types Of Down Payments

Now, there are essentially two forms of legitimate down payments.

1) Simply cover the 20% with your own cash. You need $80,000 for your equipment purchase, the bank will provide 80% or $64,000 and you cover the other $16,000 out of your own pocket.

2) You have built in equity in the item being bought with the loan. Here, you are buying a commercial property to expand your small business (and quit paying outrageous rents). The purchase price is $250,000. Yet, that price is only 80% of its market value - the market value is $312,500. Thus, the difference between the purchase price and the true value of the property is the 20% - 20% equity in the property.

Where To Get That Down Payment

There are several ways that you - the business borrower - can get that required down payment as most small business owners either do not have that kind of cash on hand to cover the 20% or just do not know where to obtain it.

Don't Pay It:

1) Negotiate with the lender. While this does not provide you the equity to put down - it can alleviate that requirement all together. If your business is strong enough and the lender really wants to work with you - then negotiate that requirement away - and get that lender to cover 100% of your needs.

2) Negotiate with the seller. If you are buying a physical asset like equipment or commercial real estate then negotiate the price to 80% of the asset's value. Kind of hard to do these days with property values being as low as they are and that most equipment vendors do not have control over their prices - but, if the person wants to sell as bad as you want to buy - then they will find a way to work with you - they always do. MSRP prices are more wish lists then actual prices.

Find The Money:

3) Personal loan. Do you have equity in your home or other personal assets? Can you get a personal loan based on the personal income you do have? Can you tap some other source of personal income or equity - that 1) does not relate to your business and 2) does not put an additional burden on your company?

Most lenders will find out about all of your business debt and most of your personal debt during their approval process. Know that with the business debt, they will include that in their underwriting process when approving your business loan request. And, if they find out that you took another business loan to cover your down payment - they tend to frown on that. But, if they find out that you have a personal loan - even if they know that you did that to cover your down payment - it is still a personal loan and something that ties you personally to that new loan request - means you might get away with it.

Growing Your Business With Confidence

Growing a business is a challenge that requires hard work and focus, discipline and dedication, as well as a clear vision and genuine sense of responsibility. All these ingredients are necessary to minimize the often-unavoidable growing pains that come with building and developing a business. And yet, many leaders and managers who take on such challenging positions simply ignore or skip the number one rule: to remain confident at all times.

Business leaders and managers often struggle with juggling the many responsibilities that come with their jobs, and more particularly with handling sudden problems and unexpected changes.

When leaders or managers struggle to handle the many unavoidable problems and changes inherent to the development of a company, it can create serious issues and negative consequences that effect all areas and branches of a business. Staff, finances, business planning, and general strategy and procedure are all likely to suffer from a manager's lack of confidence, positive outlook, and clear vision.

If a business leader doesn't posses these important qualities, the chances of growing the business according the business plan become very slim. The good news is there are steps that can be taken before reaching that point in time when it's too late to prevent serious problems from developing.

Confidence Is Key

A good manager must have a genuine sense of confidence in what he or she can do for the business. To put it bluntly, doubts aren't allowed. And, the success of a business relies on the manager's abilities to keep a positive outlook as well as lead his team with a very clear vision of what's expected of them, and of the business.

Aside from confidence, vision, organization and prioritization are also deciding factors for the success of a business. Organization and prioritization are two very important qualities that a manager should possess when leading a team and growing a business.

Handling each situation based on their level of importance is the most effective way of keeping stress and disorganization at bay. Growing a business in itself is hard enough and prioritizing tasks is the best way to avoid unnecessary levels of stress, worry and negativity, which will end up affecting all areas of the business, both internally and externally.

A manager's confidence will reflect on the company as a whole and as a result, his or her team will be able to operate in a much more peaceful and positive environment. This ultimately leads to a positive impact in the growth and overall performance of the business, keeping the dreaded "growing pains" to a minimum.

Time Management for Leaders...

Being able to manage your time effectively is another important quality when running and growing a business. Time is money, thus having a clear vision of what needs to be achieved in the time dedicated for a particular task is an absolute necessity for a business leader. Sometimes life and business itself obscure this vision, but the worst thing you can do is burry your head in the sand.

Instead, focus 100% on the most important task you've set yourself for the day. It's the easiest and most effective way of keeping the vision and outlook you've initially set for yourself and your business. Distractions will occur and more tasks will arise, but it's up to you as a responsible and focused leader to put forth your best effort to one particular task before moving to the next.

Another very important point that budding entrepreneurs and business leaders should bear in mind when embarking on their job is listening to what other people have to say. People with leadership responsibilities have a natural tendency to not seek advice or second opinions from others because of the nature of their responsibilities.

Being responsible for the growth of a business-be it yours or someone else's-shouldn't prevent you from asking around for ideas and opinions. Although it is a key responsibility of the leader, growing a business will ultimately require a team effort.

Listening Skills and Momentum...

Now, listening to what your employees have to say or simply asking for opinions doesn't mean that you must stick to what you've heard. Although you should be an independent thinker, some advice or ideas you may have gleaned from your staff can trigger a chain of thoughts that you could not have foreseen or anticipated before. Being open-minded and open to suggestions shows great leadership.

Top 10 Marketing Books for Small Business Owners

Unlike big business owners, small business owners have the burden of taking care of every single aspect of their business - recruitment, marketing, finance, accounts, managing employees to managing vendors, and so forth. But here we focused only on books that can help you gain marketing knowledge and skills. Here are the top 10 books on marketing which we believe are helpful for new as well as established small business owners.

Book # 1: The New Rules of Marketing & PR - David Meerman Scott

In the new marketing scenario, the methods such as ad copy, etc. do not bring results for your business. With the popularity of smartphones and other devices and proliferation of the Internet, new methods, rules, etc. of marketing have evolved. This book discusses the importance and benefits of using such techniques.

David M Scott provides fresh examples of success from various industries and businesses across the world. He highlights the new tools and techniques that marketers should use to communicate with their buyers directly - Twitter, Facebook, LinkedIn and YouTube. In short, this book is a guide that offers actionable strategies and insider tips that can be implemented immediately.

Book # 2: Word of Mouth Marketing: How Smart Companies Get People Talking - Andy Sernovitz

This book by Andy Sernovitz emphasizes the use of word of mouth marketing for businesses. The book elaborates purpose of blogs, social media, viral emails, etc. - when to use them and how to make them work.

Word of mouth is an effective tool to share information quickly and easily to promote businesses. It is an effective tool that can promote your business via your customers, friends and relations.

Book # 3: Guerrilla Marketing: Easy and Inexpensive Strategies for Making Big Profits from Your Small Business - Jay Conrad Levinson

This book furnishes strategies for Internet marketing, tips on using technology like pod-casting and automated marketing, programs for targeting prospects, cultivating repeat, referral business, management lessons in the age of telecommuting and freelance employees, etc. - exclusively for small businesses.

Book # 4: Duct Tape Marketing: The World's Most Practical Small Business Marketing Guide - John Jantsch

John Jantsch is a well-known expert in small business marketing. In the book, he discusses all the proven tools and tactics together in a step-by-step marketing system. This road map helps small business owners in knowing what they need to do to market their businesses.

Book # 5: Smarter, Faster, Cheaper: Non-Boring, Fluff-Free Strategies for Marketing and Promoting Your Business - David Siteman Garland

This book provides strategies for building, marketing and promoting businesses. These techniques are smarter, faster, cheaper and therefore save your time and money. The book is equally helpful for start-ups as well as those who are already in the market for sometime.

Book # 6: Marketing Shortcuts for the Self-Employed: Leverage Resources, Establish Online Credibility and Crush Your Competition - Patrick Schwerdtfeger

This book provides effective practical strategies and tactics - a complete tool kit to use resources sensibly, to establish online credibility. If you apply these strategies, you can get good results for your business within a brief span of time.

Book # 7: Ultimate Small Business Marketing Guide - James Stephenson

This book is an essential guide for every business owner. James Stephenson presents in this book 1500 great marketing ideas that are sure to boost your sales revenue, profits and customer loyalty and also to help you stay ahead of your competitors.

Book # 8: Web Marketing for Small Businesses: 7 Steps to Explosive Business Growth - Stephanie Diamond

Marketing for small businesses was difficult in the past. But today, it is not the case. Web marketing enables small businesses to take advantage of marketing opportunities and win new customers.

The book 'Web Marketing for Small Businesses: 7 Steps to Explosive Business Growth' focuses on different ways of marketing with a detailed strategy to put them into action. The main content of the book comprises checklists - niche, brand, story, search, content, social media tactics, traditional tactics and results. This book helps you implement web marketing strategies.

Book # 9: Likeable Social Media: How to Delight Your Customers, Create an Irresistible Brand, and Be Generally Amazing on Facebook - Dave Kerpen

This book is a key to unlock the door to new opportunities. It tells you about how to build brand awareness by engaging customers in social networking sites like Facebook, Twitter and other social media networking sites.

Book # 10: 500 Social Media Marketing Tips: Essential Advice, Hints and Strategy for Business: Facebook, Twitter, Pinterest, Google+, YouTube, Instagram, LinkedIn, and More!

Business Intelligence, The Key To Company Success

Business Intelligence (BI) is the ability to transform data into information and information into knowledge, so as to optimize the business decision-making process. A set of strategies and tools focused on knowledge creation and management through the analysis of existing data from an organization or business.

From the point of view of information technology, we can say that BI is a set of methodologies, applications and technologies that allow a business to the group and transform the data obtained from structured information systems to do analysis and information generation and improving the process decision-making of the business. It covers both current understanding of the functioning of the business as well as an anticipation of future events, in order to provide a body of knowledge to support business decisions.

Referring to business intelligence, we can differentiate the concepts of data, information and knowledge. Data is something that is vague, for example, the number 10, while the information is more accurate, such as April sales were 10. Finally, knowledge is obtained by analyzing the information.

Data are the minimum semantic unit and are the primary elements of information. These alone are irrelevant to the decision-making process. A phone number or a name of a person are examples of data.

The data can come from external or internal company sources, can be objective or subjective, qualitative or quantitative.

Moreover, the information can be defined as a set of processed data, which are relevant and have a purpose and context. The information is useful for decision-making, as it allows reducing uncertainty. The data is transformed into information to add value.

The information is capable of changing the way the receiver perceives something, impacting on their value judgments and behaviors.

Information = Data + Context (value added) + Utility (reduce uncertainty)

Knowledge can be defined as a mixture of experience, values, information and know-how, that form a framework to incorporate new experiences. The knowledge derived from the information and information from data. In order that information becomes knowledge is necessary to perform actions such as:

· Comparison with other elements.

· Prediction of consequences.

· Searching for connections.

· Talk with other carriers of information.

By gaining knowledge of the business once the information is captured from all areas in the business, you can set strategies and define what are the strengths and weaknesses of the business.

Business Intelligence is the broader concept of the use of intelligence in organizations. This has emerged from the contributions of the various areas of information such as market intelligence, competitive intelligence and business intelligence.

Market Intelligence corresponds to the strategic management discipline within companies that allow a more deeply know of the market and the company's performance within it, through a constant flow of information.

Competitive Intelligence is defined as the process of collecting and analyzing information on the activities of competitors, so as to support the achievement of the goals of the business. Through a continuous flow of information, allows a business to know what the competitors are doing in the commercial, financial, and organizational aspects.

Finally, Business Intelligence refers to the set of tools to extract business experience. A set of systems to delineate dynamic customer base, such as sales trends, niche value, customer churn, profitability segments.

Intelligence tools are based on the use of information systems that bring together data from production processes, information relating to the business and economic data.

Using the techniques to extract, transform and load (ETL), data extracts from different sources, are purified and prepared for a load them into a data repository.

This toolkit has the following features:

• Access to information. The data are the primary source of this process. Systems have to ensure user access to data regardless of the source of these.

• Support the decision making process. Beyond the presentation of information, users need access to analysis tools, and select the data that interest them.

• Orientation to the end user. Independent expertise of users, these systems, must provide facilities that allow users to use these tools.

Business intelligence acts as a strategic factor for a business to build competitive advantage, by providing privileged information to respond to business problems: entering new markets, product promotions or offers, eliminating islands of information, control finances, cost optimization, production planning, customer profiling analysis, profitability of a particular product.

The main business intelligence products that exist in the market are:

• Balanced Scorecards (BSC) are tools to establish and monitor the objectives of the business and its different areas or units.

• Systems Decision Support (DSS) corresponds to interactive information systems that help companies make decisions, using data and models to solve unstructured or semi-structured decision. Supports decision making by generating a systematic evaluation of different alternatives or scenarios for decision.

• Executive Information Systems (EIS), are systems that provide top executives easy access to internal and external information that is relevant to their critical success factors. The Executive Information Systems support the decision making process of senior executives of an organization, presenting relevant information and using visual aids and easy to interpret, in order to keep them informed.

In reference to the origin of the data, existing components are: Datamart and Datawarehouse.

A Datamart is a departmental database, especially in storing the data that is specific to the business area. It is characterized by having an optimal data structure, to analyze information from all perspectives that affect the department.

Moreover, a data warehouse is a corporate database, characterized by integrating and debug information from one or more sources in order to allow analysis from many perspectives.

On the other hand, a Business Intelligence solution establishes a cycle from the following activities:

• Observe: what happens?

• Understand: Why is it?

• Predict: what will happen?

• Collaborate: what actions you should take the team?

• Decide: which way forward?

Why is it so important Business Intelligence?

For a business to be successful, it is very important the ability to make accurate and quick business decisions. Traditional information systems tend to be inflexible structures, making it difficult to adapt to the data capture processes of the business, and rapid generation of information for decision-making.

To overcome the limitations of these systems, business intelligence relies on a set of tools that facilitate the processes of extraction, purification, analysis and storage of data, with appropriate speed in order to support the decision making process of the business.

We cannot say that BI products are better than traditional applications, but they are developed for a different purpose, and therefore are more efficient for the decision-making process.

Business Intelligence solutions enable companies to:

• Process requirements quickly, intelligently and efficiently.

• Respond quickly and efficiently to changing conditions affecting the company.

• Establish information as the main asset of the business.

• Transform business data in intuitive graphical reports that can be analyzed quickly and easily.

Intelligence is the Key to Success. The Business Intelligence systems are now available to everyone. The well-designed BI applications can offer employees the ability to make better business decisions quickly, understand the various "information assets" in their business and how they interact.