Having a balanced scorecard in your business is an amazing way of keeping track on what’s happening and alerting you when things are going off track. So what is it?
A balanced scorecard looks at four areas of your business – financials, customers, internal processes and training/development.
Once you have a handle on each of these areas and monitor them on a regular basis, you will know exactly what is happening in your business and be able to react quickly if things are going a little wrong.
Many business owners have no idea how much is in their bank account, how much profit they are making, how many customers come back and order a second or third time or don’t come back at all. How often have you seen customer reviews which highlight a problem and no-one responds or appears to make any changes to correct the issue?
Once you are aware of all of this, you can create an action list and do something to improve the situation pretty quickly.
So do YOU know about your business finances? Profit is income minus expenses – not just the turnover in your business which many people think. If you aren’t making money, why are you still in business? After all, we are all in business to count the money aren’t we?
Do you really know how many active customers you have? Or what those customers think of you and your product or service? Having this information is like gold dust – once you are aware you can focus your activities on retaining those customers, perhaps remarketing to old customers or those who have only bought from you once.
What about your internal services? How quickly do you answer the phone or respond to emails? If a potential customers doesn’t get an answer within a reasonable time – and you can set that timescale – then they will go elsewhere. Do you really want that to happen? Knowing how quickly you respond means that you can look at the process within your business to improve it if necessary. Delivery times could be important to your customers. If you don’t know the answer, then ask them!
Having staff who are well trained, up-to-date with the latest technology and focussed on your business and the service they deliver will be reflected in your bottom line. If customers receive a good service from staff who know what they are talking about, they will return. If you are out-of-date and slow, then they will very quickly go elsewhere.
All of these things make up a balanced scorecard. They are the key performance indicators (KPIs) which show you that your business is a success. They will therefore be different for every business depending on what is important for you.
Your KPIs should also be linked to your business plan so that you achieve the goals you have set for the business in the current year.
If you need help with business planning or KPIs, then please get in touch.