We recently had a friend over for dinner and the conversation turned quite naturally to the Indian Premier League, the cricket league played out of India. He had been studiously avoiding watching any matches maintaining that the series was trivial from the perspective of cricket. Interestingly enough, he checked the scoreboard every day and knew which teams were doing well and in particular, how Eoin Morgan was faring.
I will not go into the long debate we had over how India had redefined cricket, but more interestingly from a business perspective, I wanted to marvel again at how much we take the scoreboard for granted in all sports and ignore it in the one sport where a lot of us spend a majority of our time – the sport of business!
Imagine two teams playing for the whole day with no scoreboard to keep track of who’s winning. At the end of the day, they’ll congratulate each other for a good game played and go home, then come back again the next day to repeat the show. After a week of doing this, how keen do you think the captain is going to be to keep motivating his team? How excited is the team going to be to get out of bed everyday and get to the field? Can you see the spectator stands in the second week? Are they bursting with people cheering the teams on?
As absurd as it may sound, this is how most business owners play their sport. And then they wonder why their team is not motivated, why the banks won’t lend to them and why customers are not flocking to their doorstep. Most will glance at their profit and sales figures at the time of the year when their accountant tells them they are legally obliged to do so. They will also keep an eye on their bank balance to make sure they can pay today’s bills and come back for another day of play. Is this really enough?
Many of the systems that are really required for a good business scoreboard don’t require anything other than simple personal discipline to test and measure, every day, every week and every month. It seems like a major undertaking at the start but like many tasks, when organised, established and routine it takes just a few minutes a day. This scoreboard once built, will give an instant perspective on your business’ performance for the previous week.
The content will vary from business to business, however typical content might be as follows for the past week:
How many Leads did you receive?
Where did they come from by source? (eg Referrals, Website, Telemarketing, Local Newspaper Advertisements)
How many Sales did you make? What was your Conversion Rate?
What was the Value of your Sales?
What was the Average Value per Transaction?
What were your Invoiced Sales?
What was your Gross Profit?
What were the Cash Receipts?
What was the Bank Balance at the close of the week?
How many Debtor and Creditor Days did you have at the close?
How many Direct Labour Hours were available for production or service delivery?
How many Direct Labour Hours were invoiced this week?
What is the Measure of Time Expected versus Time Taken on jobs and tasks?
What is the Percentage Right First Time?
What was the value of Wastage?
Most businesses can actually put a skeleton of a scoreboard together quite quickly and improve it as they go along.
If however, you need a template to get started, send me a mail back and I’ll send you one. The important thing to focus on when you have your scoreboard is a regular review to reflect on the wins, challenges and learning for the week. It makes sense to set time aside to do this at a regular time each week and compare the results with pre-set targets which are stretching yet achievable and realistic. Some of these might be “Key Performance Indicators” looking at activity, whereas some will be outcomes or “Key Results Indicators”. Some of these measure may be more complex that others but once these are captured, there will often be some obvious massive improvements which could be made to the business to improve the bottom line.
Whether there’s a need to focus on more sales activity, sales performance, more marketing effort, better cash collection systems, or operational efficiency, the old adage applies: “You can’t manage what you don’t measure.” Without a scoreboard, you are not really managing your business. My team is sitting down with a few business owners this month to do a complimentary strategic review of their business. If nothing else, this should give you a great head start to identifying and measuring the key indicators in your business and building your business scoreboard. If you are willing to spend around ninety minutes sitting down with us, working on your business, give us a call and we’ll schedule a convenient time.