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What Is A Scorecard For Your Business?

What Is A Scorecard?

A scorecard gives your organization a current snapshot of various performance metrics compared to your goals. A scorecard is a great tool for your organization to make strategic, data-driven decisions.  A scorecard also helps you monitor and manage how parts of your organization performs.  All  of this improves your ability to achieve goals.

Each team member may have their own scorecard.  The items tracked on an individual scorecard, if set up correctly, can help team members know how their contribution helps the organization as a whole.   They can monitor progress towards their own individual goals as they relate to the organization’s goals.

The information that goes on a scorecard should be available from sources within your organization, your social media accounts, website statistics, financial reporting, CRM, etc.

Why Have A Scorecard?

By gathering information available throughout your organization and sweeping it into one place, the raw numbers, trends over time, and difference calculations can paint a clear picture of the health of your organization.  Your team can see at a glance how the group is doing, what corrections need to happen, and what decisions need to be made.

A scorecard is THE PLACE to sweep the key performance indicators that show how you’re doing and where you’re going.

The Main Sections Of A Scorecard

To expand more on the section above, you would want a scorecard to help you keep an eye on the most important key metrics across your business.  A “balanced” scorecard usually contains four sections.  Within these sections, you typically want to monitor metrics that help you focus on both stability and growth.  You also want a mix of leading and lagging indicators.  We’ll dive more into these topics in a minute.

Financial

You would typically want to monitor your current account balance. 

  • To help you maintain stability within your business, you would also want to track expenses. 
  • Financial growth happens in your business when you generate income.  

Customer

The number of current customers or clients (or members if you’re a non-profit organization) tells you something about the health of your organization. 

  • Retaining existing customers adds stability to your business. 
  • Adding new customers contributes to your growth. 

Operations

Your internal documented processes, key activities and resources that you use to deliver value to your customers are examples of metrics you want to  track. 

  • All of these add to stability within your business.
  • If you can handle more capabilities, more throughput, you can handle more customers and grow.

People

Having the right people, sitting in the correct seats, is critical for the health of your organization.  Each person in your organization needs to manage to key metrics. Each person also needs to continue learning and growing.  This is where you would document and track progress your employees make towards their training goals, along with their performance goals.

I’ve heard of a “Balanced Scorecard”, So What Is That?

So far, you’ve seen that a scorecard contains financial, customer, operations, and people metrics.  That’s one type of balance that helps your leadership team see a holistic view of the entire organization.

Another way to find balance is, as we mentioned above, is by tracking both “stabilizing” metrics and “growth” metrics in your organization.  Within the four sections, look for a balance between metrics that help you focus on 1) reducing or eliminating waste, like financial expenses, and 2) metrics that help you focus on increasing and growing the organization, such as income and clients.

The third way to add balance to your scorecard is to incorporate a balance of both leading and lagging indicators.  

  • Lagging indicators are your outcome “results” metrics.  Examples include your bank account balance and the number of customers you have. These outcomes, say at the end of a month, can be compared to the previous month’s amounts.  
  • Leading indicators are the “activities” it takes to affect your lagging indicators.  The number of outbound sales calls, sales presentations given, blog posts written, etc. are activities that, hopefully, can be tied back to results.  
If you get the leading activities defined properly, you can predict the results with some level of certainty.  Looking at a non-work example, let’s say you have a personal goal to lose 10 pounds in 10 weeks.  You decide to weigh yourself every Monday morning at 8am and document your weight.  You can stare at the number on the scale all day long and no matter how hard you wish it to be another number, the scale is simply reporting a number.  That number can be compared from one week to the next to track progress towards your “results” goal of losing 10 pounds.  
 
  • Your weekly weigh-in number is a lagging indicator
  • The leading activities that can be used to predict with some level of accuracy would be 1) the calories you consume in each of 21 meals between now and the next weigh-in, and 2) the amount and type of exercise you perform for the next 7 days.  Diet and exercise is lead activity, your weekly weigh-in is the lagging indicator, the result you wish to accomplish.

Tracking The Numbers

The last building block you need for your balanced scorecard are key performance indicators, or KPI’s.  We’ve talked a little about the things you will want to measure.   These metrics (what you’re measuring) will come together into one document or webpage, or internal communication of some sort.

Within each of the four sections of the scorecard, you’ll want to identify high level strategic objectives.  Within the financial section, for example, you may have two strategic objectives like “reduce expenses” and “increase revenue”.  

For each of the strategic objectives, you’ll want to define at least one SMART goal.  

  • “Reduce expenses from $5000/month to $4000/month by December 31st” is an example of a lagging indicator that is time bound and measurable.  You can pick up this number each month from your P&L and the head of your accounting department would be the person responsible for providing this update every month.  Just like the 10 pound weight loss challenge, money spent each month is the lagging “result” of “activities” throughout the month. 
  • Every department can have at least one leading activity that helps contribute to reducing costs, actions they each can do that contribute to the bottom line.  Building maintenance, fleet management, HR, legal, operations, sales, marketing, all can waste money and can find places to save. The cost-saving measures throughout the month can be used to predict with some certainty how much will be spent by the end of the month. Each of these would also be written as SMART goals.  Just make sure they are set to a date, can be measured, you know the source of where to find the number, and someone can be held responsible for providing the number for the organization’s overall scorecard.

Bringing It All Together

The final step is to simply assemble all the parts we’ve already talked about.  



lead magnets: KPI planner, DSHBD

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What Is Business Intelligence (BI) For Small Business?

What Is Business Intelligence (BI) For Small Business?

By Tom Argiro, Owner of HBG Consulting
December 28 2020


Business intelligence tools have not been traditionally available for small businesses until recently. There are several solutions out there now, including the tool we built, knowing exactly what small businesses need.

Business Intelligence can help you increase profits, streamline internal operations, capitalize on opportunities, and reposition your competitors. The problem is, many small business owners don’t know what business intelligence (BI) is, what BI Tools are designed to do, or how it can help them. This article will shed some light for you.

What Is BI?

Most organizations collect large amounts of information.  Your customer files, accounting software, prospect files, and other systems contain information about your organization.

However, all of that information is trapped in systems designed to manage specific business functions. These systems are not designed to interact with each other.

Large enterprises have entire systems and teams of software developers with one main function.  These teams gather data from all the other systems throughout the company.  They generate dashboards, scorecards, data analytics, and visualizations about that collective information.

Small business owners usually do not have access to such a powerful decision-making tool.  They may not even realize that such a possibility exists.

Imagine for a moment, as a small business owner, if you had a way to gather, filter, analyze, visualize, and interact with all that information.  You could gain some important insights about your organization.  You would see trends in data that you may not be aware of.  You could explore opportunities.  You could close gaps on weaknesses within your operation, and reposition the competition.

The process of analyzing historical and current data, exploring that information in a new way, and helping you reach intelligent business decisions is collectively defined as “business intelligence”.

BI Tools  Are Usually Out of Reach

Most Business Intelligence Tools (BI Tools) are usually too expensive and out of reach for small businesses. They typically require expensive custom software, or an expensive data analyst on payroll.

How Small Businesses Can Use Business Intelligence (BI)

If you had access to a BI tool, these are some of the educated, informed, data-driven decisions that BI could assist you with:

  • increase profits – Profits come from two sides of the equation. There are two ways to increase profits.  You can either increase money coming into your organization, or you can stop money from going out.  Analyzing your cashflow, customers, sales income can help you see places to be more profitable.  You may also see wasteful spending in your organization that you may not otherwise be aware of.
  • improve internal operations – product development, workflows, order fulfillment and customer treatment are just some of the operations you manage in your company.  Data analysis and visualizations of the information in your tracking systems can shed light on process improvement opportunities.
  • understand customer behavior – understanding the sales pipeline for new customers can help you find ways to help close gaps in your sales and marketing efforts.  You may not have a good sense of purchase histories, average time between purchases, product return habits, and more.  Exploring data can help you learn more about your customers, discover segments of customers you didn’t know existed, and develop ways to treat individual segments differently.
  • assess competitors – market research and competitive analysis are always insightful.  Learning about their offerings and finding gaps in the services they provide can help you find new niche markets.
  • develop strategies to reach new markets – By understanding segments of customers and categorizing them into clusters, can help you discover which clusters are more profitable for your organization.  Take that new knowledge and develop strategies to attract more customers that fit into those clusters.
  • avoid risks – Every organization faces risks. Risk can not be eliminated.  It can, however, be managed and reduced.  By closely monitoring the results of test marketing and sales, you can spot trends in the data and make quicker decisions. This can help you avoid larger losses that you might incur if you didn’t have a way to analyze the results and effectiveness of marketing campaigns.
  • capitalize on opportunities – By knowing your organization’s strengths, combined with new found knowledge of customer behavior & segments, there might be huge market opportunities staring you in the face.  Without seeing the data and the trends, you could completely miss the opportunities. A good BI tool can help you discover those opportunities so you can capitalize on them before your competitors figure it out.

Why We Created BI4.us – Business Intelligence For All Of Us

A BI Tool For All Of Us

Considering everything we mentioned above, we know that small business owners need the power of BI to make informed decisions.

We also know that you normally couldn’t afford a custom BI solution.

We used our 30 years of corporate BI experience, combined that with experience running small businesses and supporting non-profit organizations, and discovered our new super power.  We then leveraged that super power and invested the time and energy to create a flexible BI tool for small business owners and non-profit organizations. Now you have access to a powerful, flexible BI solution.  You can gather, filter, analyze, visualize, and interact with all that information normally trapped in various business applications, like never before.

Now Business Intelligence Is Within Reach For Small Businesses!

We want every business that’s serious about improving their current situation to have access to the power of business intelligence.

Learn more about Business Intelligence.  Discover how you can apply BI to your organization.

Schedule a demo now.

 

About Tom Argiro – Owner of HBG Consulting LLC and Executive Director of the North Phoenix Chamber of Commerce. Tom understands the pain points chamber leaders experience with membership engagement, retention, new member growth, and generating revenue outside of membership dues. Mr. Argiro comes to chamber leadership with a unique background as a software engineer for over 30 years in fortune 100 companies. Combining knowledge from both fields gives Mr. Argiro the ability to develop needed solutions for the problems chamber leaders face.