Getting an Accurate Picture of Your Business
I don't have much use for self-help books that trumpet, "What you can visualize, you can achieve." Believe me, I did plenty of visualizing during my six years killing hogs at a slaughterhouse, and I sure didn't grow rich until later--when I took action.
I much prefer Napoleon Hill's book, the Laws of Success. One of my favorite laws is No. 11, which is "Accurate Thought." You must see the world as it truly is and not how you wish it to be.
As entrepreneurs, whether we have accurate thoughts about our businesses is determined in part by the types of reports we look at regularly. After we practice "ready, aim, fire," it's necessary to measure whether we hit the target or just shot our foot.
Here are some tips to help you with your reporting challenges:
- Make your most critical report a short, daily one.
I like my reports like the dashboard on a jumbo jet: one page, so I can see the company status at a glance. Some key numbers I follow are bank account balances, sales volumes (both quantity and dollar volume), and the number of customers subscribing/unsubscribing to services. If something on the one-pager raises questions, I can, of course, get much more detail on other reports.
It's critical that each of your departments or products be measured daily with a single number on this one-page report. It forces every manager to focus each day on what really counts, rather than doing so only for a monthly or weekly report cycle.
If you can't get your key numbers down to one page, either you're not trying hard enough, or the numbers you're following are not the essentials.
- Admit when you're confused or unsure about what something means.
It takes a self-confident person to say, "What's that 'TQ Index' column?" or "I see that we're averaging 4.9 percent for returns, but how does that compare to our competition and to our numbers a year ago?" You're much better off knowing the answers than hoping you won't look like a novice for asking them. In my experience you'll often hear others say: "I was wondering about that myself."
- Make sure you don't repel bad news.
I talked about this at some length in an earlier column. When you get bad news, do you have a nasty habit of shooting messengers or getting upset at no one in particular? Most employees quickly pick up on these not-so-subtle clues and begin to shade reports toward happy news. You must show by your actions that you encourage both good and bad news if you want to have a prayer of viewing your business accurately.
- Add human inputs to your paper and electronic reports.
That's also known as "managing by walking around." Plenty of things happen to your employees, customers and suppliers without ever getting formally reported. You should see what you're missing by hanging around those stakeholders on a regular basis. At first they may clam up at your proximity, but don't use that as an excuse to stop. Eventually you'll benefit from looking at your reports in context with what you saw and heard, and that can improve your decisions.
- Don't let IT convenience drive your management needs.
If you conclude that you could really use your numbers broken down in a different fashion or delivered more often, stand your ground even if your IT person says he can't run the report or that nobody's ever asked for it broken down that way. If that information will help you make decisions, a way must be found. Maybe the report will cost you resources to create and truly cannot be delivered for a while. It's fine to negotiate a middle ground, as long as people are moving in the direction of getting you the information you need.
- Know your own personal numbers daily.
A mentor pulled me aside 40 years ago and gently berated me for not knowing my personal bank account numbers on a daily basis. When I made it a habit to watch those numbers every day, my income jumped, and I'm convinced it was no coincidence. There's much more to life than money, but that's no excuse for being an ostrich and burying your head. Knowing your daily net worth helps you eliminate surprises you won't like.
The next time you're handed a report, pause for a moment and notice your gut reaction. If part of what you feel is a sense of dread, then you need to roll up your sleeves and fix that report. Don't give up even if the fix involves many versions and even some backtracking to get it just right. When it begins to deliver succinct, meaningful insights, you'll look forward to it and welcome its contribution to an accurate view of your business.