Small Business Blog

Systematize Your Business (Record & Report) - Do You Run Your Business On Gut Feeling, Or ‘No Bull' Facts?

How Do You Know How Well; People, Processes, Departments, & Everything In Your Business... Are Performing?

Find out how you can take an ‘R&R' approach to your business and reduce its reliance on you dramatically! "And just how can ‘R&R' get me there", I hear you mutter. Well, stop thinking Rest & Recuperation, and start thinking Record & Report!

In Part 3 of 4, of systems, we learn how Recording & Reporting gives you huge gains toward a more self reliant business and a less ‘you' dependant business. Plus you'll learn the top 2 things you should be recording right now and how to get started right away...

Why have you missed the boat in the ‘Information Age'? ... Where's your information?

Knowledge is power. You can't manager what you don't measure. If you don't know the numbers how can you improve the numbers? .... I'll tell you what, I'm sick of repeating these well known phrases. Why? Well, I truly believe 99% of people understand and agree with the logic behind having access to and understanding what is performing well, and what is not, so you can affect change for better results. I mean, the more accurate the information you have, the better decisions you can make, right? ... I don't think anyone would argue with that fact. So what is missing? Why, do equally about 99% of business owners, not arm themselves with the tools, I repeat ‘the tools', to truly know what the hell is going on in their business!

I've got a theory and you may not like it...

It's not, "I just don't have time for that sort of stuff, I'm just too busy". That is bull! We are all busy, absolutely, even next week on holiday I'll be busy, at the beach slowly reading a book, I'll be busy. The point is we all get to CHOOSE how we allocate our time... time to what activity. How do we make that choice?... It's based on what activities you value the most, what activities you believe will get you the results you're after, and for some of you it's also based on your skills and/or habits. If that's the case,  you understand Recording & Reporting in your business is important and would be of value, but you choose not to create and implement Recording & Reporting systems and processes because... why... well, you simply don't value it enough to do it!

Start realising the true value....

We are not reporting just for the information to help you know what's going on. We are reporting so that everyone in your team knows if they personally are doing a great job at each of the tasks that make up what they do. We are also reporting to increase the understanding of how those results of each tasks impact on everyone else in the business and what steps we can take to improve performance in each of those tasks. You see, take the subjective ‘are we doing well feeling' out and replace it with ‘hard tangible facts'!

Facts let you, and everyone in your team, know whether or not each area is performing or not. Consider this... you own a business with eight (mainly operations or admin based) staff, where you personally as the owner also wear the Marketing Manager and Sales Manager hats on top of the General Managers hat. Now consider if you were to keep only the General Managers hat and you replaced yourself as the Marketing Manager & Sales Manager with a new employee in charge of both roles. This is the million dollar question... "How do you know if that person is doing their job/role a) as expected, b) badly, or c) excellently?"

The only way to know is not, "more sales and more profit (money)", yes maybe, but to truly step away from the business, an owner and each team member must understand what key indicators lead to the desired result. It is not higher Sales that is the key indicator of success for a marketing manager (yes Sales is the result, and the result we strive for), but the true indicator, that in turn can lead to more sales, is in fact the number of enquiries or leads or opportunities to make a sale.

If you want to get leverage in your life, you need systems. Great systems come from great business processes. But if you come up with the greatest system and business process in the world it will still need human input at some stage. In order for someone to truly perform they need to understand what is a good result, a bad result, and a great result. To do this we need to 1) RECORD vital information and 2) REPORT on a regular schedule of communication in a simple manner so we can TUNE / TRAIN / IMPROVE the system or the person.

Here what you should be Recording & Reporting on?

1) Monthly Directors Financial Report:

I always recommend reviewing the following Financial Statements on a monthly basis;

• i)The overall tread over the last year by looking at a Multi-Period Profit & Loss (Statement of Financial Performance) Spreadsheet (i.e. Oct'06-Sep'07).
• ii)Last Year's Month (i.e. Sep'06) against This Current Past Month directly (i.e. Sep'07) (or Last Year's Quarter (i.e. Jul/Aug/Sep'06) vs Current Past Quarter (i.e. Jul/Aug/Sep'07), as some businesses will fluctuate their purchases from month to month and depending on recording methods Quarterly reviews can smooth this out for reviewing).
• iii)Multi-Period Balance Sheet Spreadsheet (Statement of Financial Performance)

2) Monthly {Role Specific} KPI (Key Performance Indicator) Report:

This following KPIs could be slightly different of course depending on industry, but it's a good place to start...

• i) General Manager: Net Profit $, Net Profit Margin %, Gross Profit Margin %, Gross Profit $. Shareholders Value.
• ii) Marketing Manager: New Enquiries/Leads/Opportunities to make a sale. Lead Acquisition Cost. Campaign Return on Investment. Returning/repeat Business.
• iii) Sales Manager: Conversion Rates from Enquiry to Lead, From Lead to Opportunity, From Opportunity to Sale. Average Sale Value.
• iv) Operations Manager: Quantity Measure vs Quality Measure, Inventory Days, Work In Progress Days. Budget vs Actual Billable Hours, Budget vs Actual Widget produced. Customer complaints.
• v) Finance Manager: Accounts Receivable Average Days. Government Compliance On Time. Net Assets. Bank Account Balance. Accounts Payable Days.
• vi) Human Resources Manager: Staff turnover rate. Return on training.

Don't hide from the facts, take the no bull approach to business, recording and reporting can be easily done today with the addition of technology, or through your current resources both in-house (the resident MS Excel/IT person) and out sourced (Accountants, Coaches, etc).

If you don't create a system that captures the key information about whether or not each job (role/task) is being done well or not, you will always be needed in your business. If you find yourself saying "the business always needs me, I'm the only one who knows how to do everything", then think.... is this phase really serving me well... or am I serving my ego! .... STOP, think about it!

This week's action points...

If you really don't want to say that phase anymore, start by getting your team to write out there KPIs, plus what is a good, bad and great result for each KPI.