Tweet

Using a scorecard

Written by: Mark Gwilliam

Article Overview: Businesses of all sizes, be it a large corporation or a newly-established small business, spend a considerable amount of time and effort developing well-thought out strategic plans that work to pave the way for their business’s success.

Using a scorecard

Introduce a scorecard to give you an early warning system that all is not well

Businesses of all sizes, be it a large corporation or a newly-established small business, spend a considerable amount of time and effort developing well-thought out strategic plans that work to pave the way for their business’s success. Yet, many of them fail to reach their goals. Frequently, it is because they are unable to measure their performance accurately and, therefore, only realise something is wrong when it is too late.

Using a scorecard is a great way to improve the process of measuring your business’s performance. A scorecard is a set of performance measures that are categorised according to the different performance aspects of a business. Scorecards vary immensely in their appearances, content, and intricacy. Some will include a dashboard that covers the broader performance goals of an enterprise and then expands them into more detail. Others are colour coded to make it easier to scan through them.

Using an automotive supplier as an example, one of the strategic performance goals in the dashboard of its scorecard may be “market leadership through building quality cars”. Two performance metrics that contribute to the achievement of this goal may be “the percentage of reduction in annual warranty expenses” and “the percentage of reductions in car recalls”.

When structuring a scorecard, it is important that you correctly identify what performance metrics are critical to the success of your business and need to be included in the scorecard. If you answer the question well, the scorecard can make for an extremely tangible and concrete way to define success. In general, two types of performance measures should be included in your scorecard; those that account for the achievement of current operational goals and those that account for the achievement of future goals.

The best thing about scorecards is that they allow business leaders and managers to quickly understand how their business is performing overall and to identify if there is a performance gap in a particular area. Because they are structured to reflect performance across several business areas, when there is a lag in one area, it will stand out clearly. This, in turn, allows the business manager to react immediately and solve the problem before it becomes too big to handle.

If you are an entrepreneur with a growing business, constructing a scorecard will help you to better understand what functions of the business you need to work on to ensure that your business continues to do well.

For those of you who are interested in assessing the current performance of a business, read my article “Discover 7 Common Causes of Cash Flow Problems in your Business before it is Too Late”.

Related Articles
  Balanced scorecard as a leadership tool
  Count more than the money
  Balanced Scorecard: Measuring the Important Stuff
  Develop your Sales Presentation using the Balance Scorecard
  Using Balanced Scorecard

Article Tags: amount of time, automotive supplier, busi, business leaders, dashboard, early warning system, market leadership, operational goals, performance aspects, performance goals, performance measures, performance metrics, quality cars, scorecard, small business, strategic plans, warranty



Related Forum Posts


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Igniting Your Unstoppable Business Destiny

Business Coach Explains To You How To Add Value

Tips to Take Control of Credit Card Debt

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.