Don’t get left in the dark about your business

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Running a business, no matter how big or small, is a matter of having a multitude of balls in the air at any one time.

It doesn’t matter how busy you are, having the relevant management information to hand is vital to ensure that the business is on track and consequently to ensure that urgent corrective action is taken in time if it’s not. I am often amazed how many business owners do not have vital information on the performance of their business at hand; often they find out too late.

Back in the late eighties and possibly before, the balanced score card was in vogue and to some extent this is still the benchmark that shows the way that vital information should be collected and on hand all of the time. History shows however that the collection of regular and consistent information by business leaders dates back as far as the mid-19th century in the USA when a number of large corporations started to develop. The characteristics of the balanced scorecard and its derivatives is the presentation of a mixture of financial and non-financial measures each compared to a ‘target’ value within a single concise report. The report is not meant to be a replacement for traditional financial or operational reports but a succinct summary that captures the information most relevant to those reading it.

I prefer to refer to this as a management dashboard and I believe that it should contain a concise synopsis of all of the information that is vital to the running of a specific business. My last assignment was as the CEO of a software and professional services business which effectively provided software applications, installed them and then maintained them. I received a dashboard report every Friday evening and this was my bible for the following week.

My report detailed:

How the sales team were doing against forecast and against target for the period and year to date.

Summary of latest sales forecast.

What percentage utilisation we were getting from our delivery team (look for 79–80 per cent average to allow for holidays, training etc.)

How many support calls we took in the week, what amount were dealt with within the terms of the SLA (service level agreement) that we committed to our customers and how many were not (preferably none).

The percentage utilisation of the individuals in the support team (tells you what skills are in demand and which aren’t and who needs additional skills training).

Financials: collections vs. forecast, value of invoices raised in the week vs. forecast, cash in the bank. Maintenance contract value renewed vs. forecast.

From this relatively simple document I could see the state of the business now (collections, invoices raised and cash at the bank), how operations were performing and if we had any bottlenecks or gaps in the skills base (delivery team stats, support stats) and what the future health of the business looked like (sales/order intake and forecast).