Why Scorecards Improve Business Performance
November 28, 2019
What’s The Score?
Ever since you were a kid, you’ve been keeping score. Whether it was how many Easter eggs you could find, the score of your first soccer game, or even your first report card… you’ve been keeping track for longer than you can remember. As you got older, you grew better at keeping score. Seeing the numbers in black and white created visibility which allowed you to know exactly where you stood. Having this information helped you strive to be better.
From the playground to school, and eventually to business, scorecarding can help you to improve. When using scorecards to improve business performance, the process can be both fun and extremely useful.
Here are a few tips to use scorecards to improve business performance:
When you first begin to use scorecarding to measure your business, the process does not need to be complex. You can start by tracking just a few areas within your business.
A good place to start for any business type is to track your total sales by week, then expanding into categories and specific items that are sold. Another place to use scorecarding is when looking at your inventory levels, tracking them once a week/month. If you are a service-based business, you could track the number of new leads you are generating per week by a specific channel or platform.
As you gather more and more data on your business, you’ll want to compare your numbers to how you performed at the same time last week, last month, and last year. You will begin to be able to build out forecasts or goals of what you are trying to achieve in each area of your business. The ultimate scorecard in your business is your P&L Statement, and eventually you want to get to a point where you are reviewing and analyzing it on a regular basis. Scorecarding your business as it is today will give you a great jumping-off point and a better understanding of the potential of your business.
Once you start tracking the data of your business, try to look at it at the same time every week. For example, try pulling the numbers each week on Monday mornings at a specific time. Allow yourself a few extra minutes to analyze the results and discover trends. It’s great to have all of the data you need at your fingertips, but if you aren’t taking the time to properly analyze that data, tracking it is much less impactful. You need to both access and use the data on a regular basis to visually remind yourself of the score, and to see how you are tracking to your goals and prior year’s performance.
A good way to gather all of your data is to create a report into which you simply plug-in the numbers. A tool as simple as a spreadsheet can help you compile and analyze the numbers, putting the data to work for you.
Evolve and Expand
As you begin to identify performance trends in your business, you’ll be able to start using that information to make changes in how your business runs. Do you know why some areas are doing better than others? Are you getting a return for the money you are investing in your business? Step back and ask yourself what changes you can make in your business today to drive better performance tomorrow.
Scorecards are the visibility you need to see how your business is performing, as well as to help you improve business performance. Remember, just as it was when you were a kid, keeping score can be fun too! Our team would love to help you learn more about how to do it! Reach out to us at any time with questions!