By: Matt Straker, Director, Business Consulting Services
While having discussions regarding lackluster business performance or when owners are struggling in transitioning the business over to other family members, I’ve asked business owners “How do you know you have had a good day from a business perspective?” Sometimes it takes them a while to come up with answers but over the years I have heard various answers:
- …the number of times the phone rang
- …everyone was out the door and going to job site within a half of an hour
- …the amount of money that came in today
Typically, business owners have intuitions or what is referred to as “gut feel” that they make business decisions on. Most times these intuitions prove to be correct but it is hard to quantify (or for others to even identify) the criteria used for the basis of the decision. The information (criteria) seems to be located solely in the owner’s mind and never available or recorded anywhere else so that others can assist in making decisions or be able to follow / learn the decision-making process. This can create a series of issues for a business.
- You limit the decision-making process to only you
- It is difficult to transition the business on to others when you’re ready to step back from it
- Tracking progress of the specific outcomes based upon the criteria / decisions made is difficult
This becomes very apparent when an owner wants to transition the business control over to someone else such as a family member who hasn’t experienced the business decisions and risks thru the eyes of the existing owner. So, what can be done to help offset this dilemma to help the new person in the role as well as the prior person transitioning out?
The development of a “Dashboard” or “Key Performance Indicator” (KPI) report can resolve this issue along with others as well. Why?
- It’s built to capture those nuggets of information used in “gut feel” decision making process
- Becomes a learning tool for the next person to learn about key variables (used to train or educate others especially during a transition of authority)
- Creates accountability among departments / staff to meet performance goals
- Once owner transitions back from his/her role it provides a way to keep in the loop on how things are going
A report of this type is designed to provide:
- 1-3 page simple, easy to read & understand (usually highly visual) data page
- Information that contains combination of sales, financial, operational, & organizational data (vs only getting financials from accounting dept)
- Reflects real time data against budget data or strategical objectives
- Is set up in a “flow” that emulates your business model
- Collects LEADING vs LAGGING indicators allowing for corrections to be made much earlier than if waiting until financial statements available and possibly miss the issue at hand
- Biweekly / monthly information reporting frequency
- Can be used among multiple levels / departments as common denominator communication link for company status
If you are you interested in having more “good days”, consider developing a Dashboard or KPI report for your business full of LEADING indicators (many will be non-financial) to help you effectively manage your business and enable others to help you (and them) manage the day to day activities. If you would like to see some examples, need help identifying LEADING metrics, or just need assistance getting it setup and completing it please reach out to us and we would be glad to help. I know it will make a big difference for you!
From all of us here at Holbrook & Manter we wish you many, many more GOOD DAYS!