Is more information better?

Friday, August 1st, 2014

I met with one of my business coaching clients recently – they were concerned that they didn’t have as much cash in the business as they expected.

I asked them to prepare some information for the meeting:

  • Last 12 months turnover, gross profit, net profit by month
  • Last 12 months working capital showing WIP, debtors, creditors by month
  • Last month’s job profitability analysis

When I got there the desk was covered in a deep layer of reports.  They had run every Sage report that might be relevant for the last 12 months.

It was like looking at a broken plate.  There was no way we could tell what was going on without spending hours collating numbers by hand.

When you are on the bridge of your business, steering it to your destination, you need a few, simple reports to tell you that you are on course.  This is your key management information.

Those reports should give comparisons(typically with a budget, target or previous period) and should show trends over time (typically the last 12 months).

They should show you how the business is working:  The overall flows in and out, the balances, the blockages, leaks and shortfalls.

You can drill down into the detail reports to answer questions and support actions.

More information is not better.

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