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In the past, management reporting for small businesses focused on analysing historical data and presenting high-level numbers, such as changes in turnover and profit margins. Back then, the underlying data was not easily accessible, and businesses often made decisions based on outdated information. As long as the business was doing well, this was not a problem. Many business owners relied on their intuition and made decisions without fully understanding the potential impact on their business. This often led to confusion when an increase in sales and profits did not result in a corresponding increase in cash flow.
Today, we have access to the underlying data, and it is crucial that we make use of it. By analysing real-time data, businesses can make informed decisions and better understand the impact of their actions. This allows for more effective management and can help businesses achieve their goals.
Simon Pinion, Business Advisory Partner explores this further in our latest article.
Data Driven Management Information (MI)
In today’s dynamic and competitive environment, relying on outdated and aggregated data can be risky and inefficient. Data driven MI is a new approach that leverages real-time, granular, and relevant data to provide actionable insights and recommendations for businesses.
Data driven MI has several advantages over traditional MI, such as:
- It enables faster and more accurate decision making, as businesses have access to the latest and most relevant information about their business.
- It allows for more flexibility and adaptability, as businesses can adjust their plans and strategies based on changing market conditions, customer preferences, and competitor actions.
- It enhances customer satisfaction and loyalty, as businesses can anticipate and respond to customer needs and expectations more effectively.
- It improves operational efficiency and profitability, as businesses can optimise their resource allocation, cost management, and revenue generation.
Data driven MI requires a shift in mindset and culture, as well as a robust data infrastructure and analytics capabilities. To implement data driven MI, businesses need to:
- Define clear and measurable objectives and key performance indicators (KPIs) for their business.
- Collect and integrate data from various sources, such as internal systems, external platforms, and third-party providers.
- Analyse and visualise data using advanced tools and techniques, such as dashboards, reports, charts, and graphs.
- Interpret and communicate data insights and recommendations to stakeholders, such as employees, customers, and partners.
- Act on data insights and recommendations and monitor their impact and outcomes.
Data driven MI is not a one-off project, but a continuous process of learning and improvement. Businesses need to constantly review and evaluate their data quality, accuracy, and relevance, as well as their data analysis and communication methods. They also need to foster a data-driven culture within their organisation, where data is valued, trusted, and shared among all levels and functions.
It can also help businesses identify and monitor the key drivers of growth for their business, such as market share, customer retention, product innovation, and employee engagement. By using data to track these drivers, businesses can understand how they affect their business performance and what actions they can take to improve them. Data driven MI can also help businesses create more detailed and realistic budgets and forecasts, based on historical trends, current conditions, and future scenarios. This way, businesses can plan ahead and allocate their resources more efficiently and effectively.
Data driven MI is the future of management reporting, as it provides businesses with a competitive edge and a strategic advantage in the market. By adopting data driven MI, businesses can transform their business and achieve higher levels of performance, growth, and innovation.
How we can help
At Scrutton Bland we are already working with clients to deliver data driven MI and we have a suite of reports that we use to identify the key drivers of growth and cash to provide regular data driven MI for our clients. We identify the key drivers and build budgets and forecasts based on those drivers and then monitor live data against those allowing businesses to make pro-active decisions in year to affect the desired outcome.
Data driven MI does of course rely on the underlying data, and it is important the accounting records are up to date and accurate, something our Outsourcing team can assist clients with.
Case study
Our team recently had the opportunity to work with a professional services firm, helping them implement data-driven management information (MI). The results were impressive – by identifying areas where the firm was leaking value such as staff underutilisation, we were able to help them significantly improve their profit margins.
Our SB Digital team built custom dashboards for the staff, empowering them to take ownership of their own utilisation rates and set ongoing targets. Forecasts and budgets were created based on key performance indicators (KPIs), including set utilisation rates for staff. By closely monitoring these KPIs and taking action when necessary, the firm experienced a shift in performance that led to a 38% increase in turnover, an 11% increase in gross margin, and a quadrupling of pre-tax profits. The net worth of the business also increased by 154%. We became part of the clients’ team that achieved this. None of this could have been achieved without the clients’ hard work having listened to the calls to action and implementing plans based on our advice.
This is just one example of how data-driven MI can transform a business. By providing real-time insights and actionable information, businesses can make informed decisions and achieve their goals.
To get in touch with our Business Advisory team to see how we can help you take your business reporting to the next level, please call 0330 058 6559 or email hello@scruttonbland.co.uk
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