Are we winning?
Taylah Wallace – Monday, February 20, 2017
Imagine attending your football team’s game and being unable to determine whether it’s winning or losing. How frustrating! Most people would probably leave or at least be unlikely to attend another game unless they were certain a scoreboard with the correct scores was in operation. A sometimes surprising fact is that many small businesses operate in this manner. There is no up to date scoreboard to provide feedback on whether the team is "winning".
One of the trends in modern sport has been the proliferation of statistics and key performance indicators ("KPI’s"). Their proliferation is sometimes a bit bamboozling for the fans and sometimes over complicated by the analysts. Most modern day coaches have all these KPI’s available to them but they will tell you there are perhaps only a few that they watch closely because those few tell the real story. The same is true with small businesses. In any small business there are likely to be a small number of indicators that matter when assessing a business’s performance. There may be a maximum of 3 or 4 profitability indicators, 3 or 4 cash flow indicators and 3 or 4 non financial indicators that will provide a very good guide to that business’s performance. If each of the designated measures are tracking as desired, the probability is that the business as a whole will also be on track. On the other hand if the business is not on track it should be obvious in which areas the problem lies.
The harsh reality is that while this is often quite simple many small businesses have no system for measuring performance or, if they do, they have inaccurate or incomplete measures. The availability of cloud based applications now means that there is no excuse for any lack of knowledge about a business’s performance. These applications are inexpensive and very powerful in simplifying the overall availability of information about performance.
We live in rapidly changing times. Many business commentators now refer to the "digital revolution" that we are living in and studies have predicted massive changes to many industries as a result. Being unaware of your football team’s performance would be considered unacceptable by most if not all supporters attending a game and perhaps a refund sought. Being unaware of your business’s performance is even less acceptable given that a lot more is riding on it than a simple admission fee. A prerequisite of being a business owner or manager (i.e. the coach) is having knowledge and information to manage the issues as they arise (or perhaps before they arise!). Having the modern tools available in your business to obtain this knowledge inexpensively and quickly is a prerequisite to achieving winning results.