The One About Scorecards
In this week's episode of Desert Island Discs... wait, wrong show.
Nigel's sending business owners to deserted islands with only a scorecard to keep them company.
Find out which key numbers you should have on your scorecard to keep you going on those cold island nights.
Welcome to Business Growth Central, practical tactics and strategies that you can use to help your business grow. You can watch the video version of this episode at businessgrowthcentral.co.uk. But now, over to you, Nigel.
Hello again at Business Growth Central where this week, we're talking scorecards. Not golf scorecards, God that'd be embarrassing, but scorecards for your business, they are hugely helpful. They are under-appreciated I think, and undervalued and actually misunderstood by a lot of business owners. So, we're going to put that right in this episode. See, the great Warren Buffett is quoted as saying that, "If you don't know the score, you can't tell the winners from the losers." I think we can adapt that quote of his and deploy it to your business.
What is the score this week? What are you keeping track of. Now, this isn't about management accounts, they're a wholly different thing. What this is about is building on what I've talked about in the last couple of episodes. So, understanding what are the relatively small number of key things in your business. Either inputs, things that you do, or outputs, things that you get, that will determine whether you are on track or not.
Once you get clear on the very small number, typically in many businesses, it is literally only a handful, five or six little things that you measure and keep track of every week, that enable you to make dramatic, sustained progress. The challenge with the scorecard is it can creep and get bigger really quickly. You start off really [inaudible 00:01:58] "Oh, I'll just add that, and add that, and add that, and add that," and before you know it, you've got 24 different measures and it's no longer useful because there's too much to look at.
So imagine that you're on a desert island, they you are, desert island. Just imagine you are on that desert island. You haven't got any email, you haven't got any phone, et cetera, but once a week you get a piece of paper delivered. Let's not worry about how it's getting in the door, you're overthinking it, but there's a piece of paper there, a single sheet of paper delivered. On it is a handful of numbers. The numbers on that sheet of paper need to tell you how the business is doing. What this is all about in actual fact is just drilling down to the small number of key things that matter. At the planning event that I ran last Thursday, I used some examples and I talked about an opticians. So this is wonderfully, wonderfully simple. So if our optician was on a desert island, but he's then got a track of how many tests were actually booked, what was the average sale? And then what was the total sales? So that's all really cool. Up to that point there, if he's sat on his desert island, that's actually, if he's got that picture there, he knows enough to know what the pulse of his business is all about. It's on a single sheet, it's really easy to grasp, is that.
I also talked about a photographer, very straightforward, really quite similar, same thing. So shoot capacity, how many shoots did we actually book? What was our average sale, total sales, losses through not hitting capacity. But if you were that photography business owner and you're on an desert island and that sheet's coming through, you're okay.
So you've seen those samples scorecards there, you've seen just how useful they are. The real trick then of course, is to make sure that when you record your numbers across the horizontal axis, that's where you want your dates, your weeks. So you record the numbers in your scorecard every week and you can see the pattern, so you get ... In our business, we have 13 weeks. So it's a quarter of the year on a single sheet of paper. When it gets to week 14, the oldest week drops off and the newest week comes on. But it is, we've always got 13 weeks of numbers to look at, so we can see the pattern and the trend and the direction of travel, as well as the absolute numbers themselves.
When you start to deploy a scorecard in the business, a few things happen. First of all, you sleep a lot better at night, genuinely because you kind of know when things are ... you're doing okay, you're on track. Secondly, it makes it a lot easier to focus what you do in your 90 minutes. It gets you out of the day-to-day because, well now you've got a new day-to-day task, which is making sure that you're hitting the targets you've set for your scorecard, which has on it only the things that really matter in your business.
That's why scorecards are such an important device. I'm recording this quite early in the morning because shortly I like to start an inner circle session. People coming from all over the country today to sit down and one of the first thing we do at the start of that session is we look at everybody's scorecards. We get to understand where are they at, against where they want it to be on the measures that count, the things that matter. Because if you're not keeping score, it's pretty much impossible to win.
And now it's time for Matt the butler's take away.
So, Nigel's asked me to come and sit on this desert island for some reason and wait for some numbers, I don't know. Oh wicked, key numbers, Aston Villa three, Arsenal nil. Well, that'll keep me going for another week.
Thanks for listening to Business Growth Central. Remember, you can watch all of our episodes in video form at businessgrowthcentral.co.uk.