By Charles Nagel, CEO, Qvinci Software.
You can’t make decisions, at least good ones, for your business with bad data or data that is missing. Many CEO’s and managers often make the mistake of managing retroactively by only receiving important data points at the end of the month. From this vantage point, many issues that could have been easily fixed if the appropriate data had been available weekly or even daily have escalated into large problems. It is imperative that the management of your company has the information it needs when it needs it to proactively manage your business.
The first step to getting the data you need is to sit down at the computer and create an outline of the most important data points to running your business. This data must be presented to you in a repetitive and reliable manner. At the same time, the format must be easy to read and quickly understood like a table or graph.
Start with a list like this:
Data I Need To Know
1. Sales
a. Revenue by item or service
b. Numbers of items (services) sold
c. Revenue by salesperson
d. Number of calls made by each salesperson
e. Forecasted sales
f. Other important sales indicators
2. Cost of goods sold
3. Expenses
a. List of costs in descending order
4. Net Income
5. Accounts receivable
6. Accounts payable
7. Cash
8. Project data
a. Estimates
b. Actual data
c. Timelines
d. Resources allocated/used
9. Anything that is important to your business success in measurable terms
Remember to customize your list to suit your company’s own specific needs. Once you have the data points identified make sure you get this data weekly. Looking at information on a monthly basis is too infrequent and looking at information after the month is over may help you plan for the next month but it’s too late for anything else. Measure your data weekly and keep your staff informed of items that look like they are off track. The key is to catch problems early while you can still do something about them. Problems won’t escalate into large issues if this approach is taken.
The Mechanics of Getting The Information You Want:
You want the above information generated automatically or nearly automatically. You do not want your accounting department to spend 8 hours formatting a file. You want a system in place that can create a predefined report in the format needed or as close a possible. The point? You want your accounting team to click a button and dump the needed data to a standard report format and email it to you. You don’t want to make a ton of work for your employees but you do need the information extracted and provided in relatively short order. A system like this reduces human error, facilitates the frequency you want, and keeps personnel working on mission critical items. In this case, software is your ally.
To be able to gather this data you must use technology where possible. It does not get tired nor is prone to human error. It will do the same thing over and over again in the exact manner if you set it up right. My advice: USE A DASHBOARD. This cannot be stressed enough. Dashboards pull the data together and present it in an easy to understand format. If you don’t have dashboard technology, or you don’t know how it applies to your operation, you should really spend a day or two learning about the technology.
Yes, you or another in your company will actually have to stop and learn about this technology. Once implemented the gains realized can be phenomenal. You get instant visibility and repeatability while your accounting staff focuses on the financial issues of your business. My own dashboard is setup such that all I do is click the refresh button and all the data points concerning the operational and financial health of my company are automatically updated and put into graphical format.
Don’t assume that technology has to cost an arm and a leg. This kind of solution does not cost a lot of money. If you run QuickBoo
ks®, take a look at our website www.qvinci.com . If you don’t run QuickBooks® you can still use Qvinci™ with Microsoft Excel® with much of the same functionality. Or you might find a software package that integrates with your financial solution. Dashboards range from $10 per month to $1,500 for enterprise class solutions for Oracle and larger implementations.
Nevertheless, it all starts with you and your team. Sit down and document the important items to monitor. Once done you can look at solutions to provide the framework to deliver you the results.
