The Ultimate Guide to the Business Owner’s Scorecard
This is part four of a four-part series by business advisor Phil Symchych, looking at how you as a business owner can plan for profitable growth. Find part one in our Fall 2022 issue, part two in our Winter 2022 issue, Part three in our Spring 2023 issue and online at Manitoba-inc.ca.
Are you ready to take your business to new heights?
If you have a clear vision of your top three priorities for the next 12 months, along with a dedicated team and a laser focus on those goals, then you’re already ahead of the game. But if you’re solely relying on monthly financial statements to guide your business decisions, you’re missing out on crucial factors that can drive profitability and accelerate growth.
Financial statements, while important, are prepared in accounting language and focus on historical and financial aspects. To truly enhance your business performance, let’s change the game.
Introducing the Business Owner’s Scorecard®, a powerful tool I developed years ago to help high-growth companies measure what truly matters. This scorecard has been a game-changer for countless clients across 63 industry segments. It’s enabled them to gain control of their entire business and achieve rapid improvements in both business and financial performance.
Just like a sports team doesn’t base its next play solely on the scoreboard, you shouldn’t rely solely on financial statements to run your business. The Business Owner’s Scorecard offers a three-step process that will transform the way you evaluate your business and set priorities.
Step 1: Define and Understand the Categories
Let’s quickly define the ten categories and criteria that are crucial to your business success. While you may already be familiar with them, it’s important to tailor these definitions and criteria to your specific business. Engage your team in this process to ensure alignment.
- Leadership: How much time do you spend working on the future and planning versus day-to-day operational tasks?
- Strategy: Can you clearly articulate your intentional and proactive decision-making framework? Can your employees, customers, and suppliers do the same?
- Talent: What is the state of your company culture? How engaged are your employees? How often do you invest in their skills and involve them in decision-making?
- Marketing: How effective are your marketing efforts in generating qualified leads? What’s your cost per lead? Are you leveraging artificial intelligence to enhance your content?
- Sales: How well do your salespeople and processes convert leads into sales? What’s your proactive-to-reactive sales ratio?
- Operations: How do you measure output? How have output efficiency and capacity changed over the past year?
- Finance and Cash Flow: Is your balance sheet strong? How are your financial ratios trending? What’s the financial forecast for the year? How much time does your accounting department spend on the past, present, and future?
- Succession Planning: Who are the potential successors for key positions? Are they aware? How are they being prepared?
- Governance: How does the board support the CEO? Do you seek advice from experienced outsiders? How do you manage the needs of various stakeholders? Are you actively working on diversity and sustainability?
- Wealth Building: How are you increasing the value and marketability of your business? If you intend to retain ownership, how are you maximizing profitability? Are your legal and tax structures optimized to protect your wealth and manage tax burdens?
Step 2: The Business Owner’s Scorecard
Now, let’s measure where you stand in each category. Using a scale of one to 10, rate your current performance (one being low, 10 being awesome). Then, fill in the chart to indicate where you aim to be in one year.
Step 3: Analyzing the Gaps and Setting Priorities
Once you’ve completed the Now and In One Year columns in your Business Owner’s Scorecard, it’s time to assess the gaps or differences between the two numbers for each category. The larger the gap, the higher the priority that area should be given.
Remember, although this process is simple, it’s not always easy. Engage your management team in a thoughtful discussion about the results. It’s essential to allow for different opinions and perspectives to be heard and validated. Consider incorporating ranges in the numbers to account for varying viewpoints.
The discussion that emerges from this analysis will provide valuable insights and help you clearly identify your top priorities for the upcoming year. These priorities will serve as the foundation for your action plans, enabling you to track progress regularly and implement strategies to close the identified gaps.
Moving Forward with Purpose
Armed with a clear understanding of your top priorities and a well-defined action plan, it’s now up to you to drive your business forward. Embrace the power of the Business Owner’s Scorecard as a dynamic tool for ongoing evaluation and improvement.
Regularly revisit the scorecard, reassess your progress, and adjust your strategies as needed. Celebrate the milestones achieved along the way and continue striving for excellence in each category.
Remember, the Business Owner’s Scorecard is your compass. Use it wisely, and let it guide you toward a prosperous future.
So, what are you waiting for? It’s time to take the reins and embark on a transformative journey of growth, profitability, and success. Your business’s bright future awaits.
Full speed ahead!
