Balanced Scorecard

You can't change what has already gone. Last year's profit figure is only good for one thing, and that's telling you how much tax your business will have to pay - in the future! It's the future that matters, and that's why traditional accounting fails most small business owners. The accounts they see once a year are little more than an historical record from a time that has long gone - meaning they are at best of little interest and at worst, meaningless.

The financial performance your business is experiencing today is the result of decisions you made in the past. Think about that for a moment, because you made those decisions. Did you make them rationally, with high quality information to hand and an accountant you could discuss business strategy with? Or were the decisions you made back then based on little more than guesswork and 'hunches'? Well, as the old saying goes, if you do what you've always done, you'll get what you've always got! Delivering future profits and positive cash flows and, in so doing, building a valuable, saleable company, requires the right decisions today - and that means having the right information with which to make them.

Much of the information that you need to collect and monitor today has little to do with financial performance and more to do with setting the right 'non-financial' performance indicators. To use a simple example, your turnover in three months' time (which is most definitely financial) is likely to be derived from decisions you make and actions you take today and over the coming weeks. Performance indicators that you should be monitoring include number of sales enquiries per week, percentage of enquiries converted into orders and average order value. Is your current marketing strategy working? Do you measure the number of enquiries and average order value generated by each marketing activity? How satisfied are existing customers? Do you ask them the right questions on a regular basis and monitor the change in their responses? All of this might sound like the sort of stuff that only big companies do, but maybe that's why they are big - and if you think big and act big, you too have a chance of emulating their success!

The balanced scorecard measures how well your business is performing in all the key areas that will drive future financial success. The above measures are just a flavour of the indicators that we will help you develop, implement and measure. And then, together, we will use that information to make decisions that will guide you and your business in the right direction. Changing your future is all about changing how you do things in the present.

To discuss in greater detail how David can help you to implement a Balanced Scorecard as part of our IfDM (Information for Decision Making) programme, call him now on 0161 266 1036 or email him at david@davidelliottassociates.co.uk.