Ever heard the saying, “If you can’t measure it, you can’t manage it”?
I used to hear it a lot back in my corporate days. There used to “Management Information” everywhere, with whole departments just to produce the stuff.
Which is great, as long as it’s used effectively.
How about you? Did you think when you started your business that you need to create an MI team at some point? I bet not.
In fact, it can be quite liberating in the beginning to not have reports in place as they can feel constraining.
They can even feel pointless when starting out. After all, there isn’t a lot of stuff to measure then, is there?
But, as your business grows, you need to make the shift into business owner and something you will need to make this role easier is good old Management Information.
Why do you need Management Information
1. To keep control over your business
Having key information to hand will enable you to see at a glance what’s happening, and if there are any issues that need to be tackled. It means you get to know what’s going on without having to do it all yourself, which is essential for growth. However busy you are, to have your key information at hand to give you a ‘helicopter’ view of your business can be a sanity saver.
2. To make effective decisions
Once you identify any issues you can take decisions quickly on any changes that need to be made. For example, you will quickly see if you are not going to achieve your turnover target for the month and can look to change something during the month to fix that. Not having MI often means that you are always dealing with issues after they have happened and can be bumbling along unaware of what’s happening right now.
3. To be more productive
You will also be more productive by identifying what is working well in your business and what isn’t. You can then do more of the stuff that is working well and stop the stuff that isn’t. See? More productive.
4. To be more profitable
You will be able to quickly see what is making you money and what isn’t and tweak things accordingly. Having MI will give you a tighter rein over your financial figures so that you can react quickly to any shortfalls and won’t be caught out by a drop in customer demand or an increase in supplier prices for example.
5. To delegate more easily
To grow your business beyond ‘start-up’ you will need to be able to delegate. Whether that is taking on employees or outsourcing key tasks. Having MI will help you to retain control, without actually doing the tasks, and also help you to manage the other person’s workload.
So I hope that by now you agree that you need to have some MI in your business, which leads me to my next point:
Where do you need Management Information?
I suggest that you start with the 4 key areas of any business:
You need to consider what information under each of these headings is important in YOUR business in order to effectively manage it.
Here are some ideas to help get you started, but just remember, you know your business best so feel free to come up with your own.
Financial Management Information
- Turnover (month to date, year to date)
- Costs (month to date, year to date)
- Forecast profit (month to date, year to date)
- Late payments / Bad debt
Customer Focused Information
- Sales volumes (total, and split by product / service type)
- Website stats
- Customer satisfaction measure
- Unit costs by supplier
- Invoices received
- Service levels
Team / Employees Information
- Satisfaction measure (theirs and yours)
- Work completed measure
- Quality control
Some of these may be relevant to your business and some may not. If you spend only 10 minutes thinking about this I bet you’d come up with a great range of measures for your MI.
How do you put MI in place?
Once you’ve decided what you want to measure, then use a way that fits you and your business to record it. After all, that’s the benefit of being the business owner, you can decide how you want to capture it and view it.
Some suggestions are obvious things like a spread sheet or a database that you (or someone in your team) keep updated.
But it doesn’t need to be anything high tech. My business model and MI is reasonably simple as I don’t work with a huge amount of customers and I have a relatively small range of services that I offer. This means that I can capture my MI on a whiteboard on the wall in my office. It works for me as it’s pretty simple and it keeps it visual so that I can easily see it.
You can use a good old notebook and pen if it works for you.
Finally, a word of caution. You don’t want to end up creating lots of extra work here. Whatever you come up with has to add more value than the work it takes to produce it.
Today’s Micro Action
Spend 10 minutes brainstorming what MI you would like to have in your business to help you manage it more effectively.