How To Find The Data That Really Matters

How many times have you jumped in your car to drive to a new destination and then not looked at the map or sat nav, fuel gauge or speedometer, or picked up travel news alerts along the way?

Of course there are folks who do just that and somehow arrive where they’re meant to, mishap free, but I venture it doesn’t happen too often.

In business as in life: We need the right kind of data, organised into useful information, to get us as efficiently and effectively as possible from A to B, from our starting point to delivering on our goals.

 Deliberately Design Information Requirements

Management, or “getting things done in order to achieve certain goals,” works best when you set a clear strategy and are able to measure progress and adapt to change as it arises along the way.

This can only happen when you have the right kind of information to hand – information that offers key insights towards your goals, whenever they’re needed. But how do you decide, out of the reams of data that you could be accessing, what you should be concentrating on?

Think TEAM

At Perle we focus on four key attributes when we’re designing information requirements for our clients and, rather helpfully (and appropriately) these form the mnemonic, TEAM:

Timely: Going back to the car analogy, it’s not much use receiving the fuel gauge reading for today’s journey in three months’ time, so think about how often and how quickly you’ll need to access information – in real-time? Weekly? Monthly?

For cash balances, this can be set to daily or, if you’re looking to improve say, individual project profitability then your best bet is to collate and analyse figures at the end of a project when all the costs have been accumulated and the customer invoiced. These can then be used to inform the pricing process for future quotations.

Effective: In order to achieve your business goals, the information you need has to be readily accessible in the time frames you’ve set, and the insights and actions arising from it should be easily understood and deliverable.

I always advise my SME clients to adopt a minimalist approach, concentrating on between five to 10 key measures which lend themselves to being presented in a Red, Amber and Green (RAG) dashboard style. Levels should be set to challenging but not impossible, so areas that require attention are immediately visible.

Accurate: Not being able to trust the data you’re using or having various, and sometimes competing, sources feeding it in, can be super destructive. Another mnemonic comes in handy here – OVOTT or One Version Of The Truth.

The person or team charged with producing the numbers should be able to justify their provenance. Over the years I’ve found that having information that agrees with, or comes from the accounting records is the best place to start. 

Meaningful: Tying in with Effective, this recognises time as a precious resource where it’s totally counter-productive for business owners to get distracted by information that doesn’t help them run their business, achieve their goals or contribute to the bottom line. This can mean coming up with just five measures to focus activity on, some daily, such as cash balances, others, weekly or monthly.

Bringing It All Together

A cash report is one example of adopting the TEAM approach that is relevant and works, in one form or another, for all our clients.

In each case, we agree up front, minimum and maximum balances they would look to hold in their bank accounts. A minimum balance of say, ￡10,000 is one that allows them to sleep soundly at night; a maximum, say ￡50,000, is one above which we agree that cash is not being deployed effectively in the business.

The RAG dashboard could then be set on a weekly basis as Red (more than two days’ closing balance of less than ￡10k), Amber (one day closing balance of less than ￡10k) and Green (￡10k - ￡50k closing balance across the week).

This information would come from the company’s bank feed, fed automatically and daily into the company’s accounting system (Xero, Quickbooks or similar). Under TEAM this simple cash report is:

Timely: daily

Effective: the data feed is automated and instantly available to view

Accurate: comes straight from the banking provider

Meaningful: cash is the lifeblood of businesses, a healthy cashflow is the no.1 requirement

How Is Your Business Doing?

All too many businesses, both large and small, spend far too long compiling detailed reports, usually because the data is there, ripe for the picking, or because “that’s how it’s always been done.” As a result, teams become disheartened, the task becomes gargantuan and reporting periods roll into one another. Affecting the business’s eventual performance, key insights become tricky to extrapolate and prioritising actions becomes impossible.   

Start at the end with what you’re looking to achieve and work backwards to design TEAM-fit information architecture that’ll help you achieve your goals, in a way that is realistic, reflects your values and working style.

And do please message me if you’d like to discuss how we could help your business with this, or any finance or strategic management issues you may be experiencing.