How you measure business performance is up to you but you might begin here:
- What do you need to know?
- When do you need to know it?
- Are you getting what you need?
- Do you understand what you’re seeing?
We happen to think measurement of profitability and cashflow are really important but there are industry-specific measurements, such as occupancy in the hotel industry and average revenue per user in telecoms and your industry might have some specific metrics that are key for benchmarking and explaining your business to third parties, such as investors.
As I say, it’s up to you to figure out what’s important to know and then make certain you know it.
And use it!
Good record keeping – a measure of success!
Whether you’re scoring a Test Match or running a business, gathering and recording data accurately and completely is the foundation for useful information.
In our world, bookkeeping is the data gathering & recording and we can’t emphasise enough that this is done in detail and kept up to date. Use technology but above all get the people and the workflows right.
And think about the information you want to get out of your software because it is heavily determined by how data is entered.
Use accounting software that produces the information you need
I bet you thought they were all the same, these accounting packages, right?
Not so. Focus on how good the reporting function is and ensure that useful reports are set up for you in your accounting software.
Although there are reporting apps that can be added to cloud accounting software, our view is if you need an app then you’ve chosen the wrong software.
Measure business performance and improve it
It almost goes without saying but I’ve seen many business owners’ eyes glaze over when it comes to management information.
Which leads us back to the top of the blog – you choose what you need to know.
And we can help – call us on 020 71250270 or email info@bluedotconsulting.co.uk
Michael – @bluedotmichael
Related links:
I stopped doing my books when I realised I was making them worse
You can have any expenses you want – so long as they’re Direct Expenses
