I’ve spent a large part of my career using information to run a business or helping other people to run a business by supplying them with a smorgasbord of reports, forecasts, KPI’s and scorecards, after spending enough time with small business owners I’ve been having a think about how information can hinder as well as aide business growth.
Burying your head in the sand isn’t a luxury many successful businesses have, although I’m sure that there are many unsuccessful businesses that have thoroughly indulged themselves in that particular dark art.
I’ve often been told that when your head is in the sand then you’re a~#e is exposed but in the right circumstances I believe that being able to ignore the bad things can be a lifesaver, I’m not saying forget they exist but a momentary lapse in your awareness of them can significantly help you focus on the issues that you can do something about immediately.
I’ve seen it in the past and heard many stories about how focussing on numbers can cause owners to detach from their end customer and forget why people came to their business in the first place, looking at KPI’s (key performance indicators) is often like looking at stars and you end up receiving information that would have been relevant last week.
It’s often very hard for small businesses to compete on price and many of them rely on a certain flamboyance to attract customers who view them as completely unique, it’s can be difficult to find the balance between maintaining the margins and making sure that the business keeps that certain “feel” to it as it grows.
So what makes good management information for a small business, after all is there much a set of numbers can tell a small business owner that their own instincts can’t? Some of the time not really but it can be an extremely useful tool in reminding them of things that they had forgotten and putting things into perspective so that they can focus on the most important issues first.
When you’re trying to fill every role in a business the most valuable commodity is often time, this means that any reports and forecasts you have need to be quick to update and obvious to understand, what’s the point in having a detailed variance analysis when all of your overheads go out on direct debits?
The key to using management information is understanding what the end result will be, do you want to monitor which is the most effective type of marketing? Or even to control your cash flows and reduce your overdraft fees? Whatever the type of report it won’t last unless you have a quick and easy way of capturing the information.
Going beyond reports it’s important to focus on not just the customer but also supplier experience, I’ve seen many businesses in the past where customers come in to buy something and they then have to get their calculators out to work out the best deal, people want simplicity and it pays to give it to them, just look at the success of businesses like Aldi compared to Tesco.
It’s always been great to come up with complex plans that will reinvent the world, but true success comes from harmonising all of the processes in a business to the desires of the customer however simple they may be, it also goes both ways with suppliers offering better prices to people who are convenient to do business with.
As an accountant based in Northampton I provide a sounding board for my clients in order to help them rationalise why they do things and if there is a more efficient or effective way, the most important part of that is understanding what makes their business unique so that we can preserve that as they grow.
If you would like to work with an accountant who is available to discuss some of the wider issues in your business then please get in touch and arrange a free meeting.
