Is real-time data the key to accurate small business performance reporting?
In order for your small business to stay on top of its game, you need to be doing some kind of performance measurement. How else can you tell if things are going well if you're not tracking key performance indicators and reporting on key data points?
It's important, however, that your reporting considers both the scope of the data you're collecting as well as the timeliness of its collection and analysis.
You have more data than you think – use it
The scope of data that can be useful for performance reporting is often wider than many business owners suspect. The more data a business has available, the greater chance they have to find a metric that provides insight they otherwise wouldn't be able to gain.
Taking a balanced scorecard approach is key here. Sure, the bottom line is an important figure to be aware of. But financial data is not the only information relevant to how your business is performing. Thinking and reporting in terms of internal business processes, customers, and how your organisation is learning and growing (three pillars of the balanced scorecard approach, alongside financial) can work wonders to improving that most crucial financial pillar.
Timing of data is important
The thing to remember about performance reporting, however, is that often the timeliness of the data is just as important as the data itself. If it's analysed too late, there isn't much to gain from it.
Think about end-of-year reporting where your financial statements are produced. The end of the fiscal year rolls around, you put together your balance sheet, cash flow statement and use them (among other things) to make judgements about how the business has performed over the last 12 months. The problem with this approach is that it's analogous to measuring the sea level once a year and using that to determine how it's been changing – all the while, you've missed the daily fluctuations that are occurring.
Real-time data that's automatically collected and is available to pull reports from at any time can make small business performance reporting a whole lot more powerful. Suddenly you have data that's both relevant and timely, which makes it all the more valuable for finding better business solutions.
To learn more about how the chartered accountants at Wilson Porter can help bring your business to the next level, contact a member of the team today