Effective Business Management: Making Good Use Of MI
Most firms collect a great deal of Management Information (MI), but rarely make good use of it as a tool to analyse their business and enable better decision making. Simply reviewing results (turnover, profit, assets under management, etc) on a monthly or quarterly basis does not constitute effective business management. So, what does? There are two keys to success:
- Focusing on exactly what delivers results
- Solving the inevitable issues that may arise
The simplest way to keep things on track is to hold weekly meetings for your leadership team. In a small firm that might be the owners, or the owners plus one or two key people who you feel it would be beneficial to involve in decision-making. You’ll know who needs to be involved in your leadership team. The first thing to create is a set of MI (or dashboard) that gets you focused on exactly what delivers results. This dashboard should contain between 5 and 15 metrics that allow you to take the pulse of your business each week. Failure to hit one of the metrics might indicate an issue that needs to be addressed quickly, before it has time to become a constraining factor in future business performance. So, what do you measure on a week to week basis to give you comfort that everything will be going well with your business within the next month or 3 months?
What To Measure?
Most firms measure outcomes, not inputs and this is where they get it wrong. You need to ensure you’re measuring inputs. Some of the key indicators that will reveal how you are likely to perform in the future might include:
- The number of touches you have with professional connections.
- The number of outward client communications (e-newsletters, blogs, social media).
- Client seminars or events.
- Unscheduled phone calls to clients.
- PR mentions in the media.
- How full your pipeline is with new enquiries or prospects.
- Any other activity that retains or generates clients and income for you in the future.
Set clear targets for the activities you measure so you know if you’re performing or not. Any misses should act like the warning light on the dashboard of your car. It’s not to be ignored, it’s an indication something needs prompt attention. Using a simple set of dashboard metrics on a weekly basis acts like a weekly health check on your business as you take its pulse and blood pressure. If everything’s on track you continue on, knowing the results will come. If things aren’t ok you can take immediate action to get things back on track. By adopting this approach, you avoid going for weeks or months at a time and then wondering why things are so far off target. Of course, you can continue to keep an eye on your monthly and quarterly results, but let these act as confirmation that your weekly dashboard has you focused on the right activities and measurements (if you are hitting your goals), or as a challenge to focus on a different set of weekly metrics (if you are not).
At your weekly meetings ensure you spend the bulk of the time solving issues; not just talking about them. Pick one or two, identify what the real issue is (which might take some time), move onto some group discussion to capture everyone’s views, but then make a firm decision on how you intend to resolve the issue or take steps towards resolution.
Taking steps towards resolution may require some baby steps and the allocation of tasks for people to take away. Any tasks should be actioned within 7 days, in time for your next weekly leadership meeting. This is what drives progress and accountability within your business. The leadership team arrives with their tasks completed and you move onto solving the next set of issues that arise.
By having an effective management process clearly focused on solving issues, your business will be able to move forward.
By Brett Davidson
For some great information on the subject of effective business management, I highly recommend reading Traction by Gino Wickman. It covers how to implement some of these management processes into your business.
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