Small businesses often lack the resources to manage information effectively.
Creating a dashboard detailing the business’ Key Performance Indicators (KPIs) is both time and cost-efficient, and easy to update. Timely, accurate, relevant and well-presented information is important to any business, as it enables managers to make the best decisions.
Whilst large corporations have teams of “information workers” in the form of accountants and analysts, small businesses may not have the resources to maintain an effective management information system. But once set up, it takes very little maintain a simple report that can yield powerful results.
Some small business owners feel they know their businesses inside out. They believe their intuition can guide them better in making business decisions than a report. But businesses are very complex and it is difficult for even the most diligent of owners to know everything that’s going on.
Key Performance Indicators (KPIs) are measures of a business’ success. They measure what is important and may be financial or non financial in nature. For Mr Lamp’s office furniture business the KPIs might be revenue, profit, on time delivery and customer satisfaction.
By improving the score of each KPI, the overall performance of the business will improve. This will only work if the KPIs chosen cover all important aspects of the business. Therefore, both financial and non-financial KPIs should be identified to provide a complete picture.
Once chosen, a dashboard is a great way to present KPIs. A car dashboard provides you, within close proximity, everything you need to be able to drive; a business dashboard contains important information required to run a business on one page.
A good dashboard should be effortless to read and require little explanation. It serves to communicate the important facts as quickly and effectively as possible. Whilst Microsoft Excel can be used to create dashboards, there are some relatively inexpensive specialist products on the market such as Tableau and QlikView.
It is said that you can’t manage what you don’t measure and this is true of both large and small business. The problem is that small businesses often think they do not have the resources to do the measuring. By using the following principles, there is no reason why small businesses can’t maintain an effective information system:
- There is no substitute for objective data so start collecting it. Even if you “live and breathe” the business some things will pass you by.
- Quality is more important than quantity. 95 percent of information that is generated is useless so don’t waste your time capturing it. As a small business owner, your time is limited so make sure you focus on the good stuff.
- Define your KPIs and make sure they cover both financial and no-financial aspects of the business to provide a full picture.
- Create a dashboard to present all the key facts on a single page in a way that’s easy to digest. Once set up, this should take just a couple of hours per month to maintain.
- Use information as a competitive advantage by doing some research on your competitors as well as on the market as a whole. Feed this into your business strategy.