Reporting gives you feedback on strategy
Strategy starts at the top with a vision and that comes from the founders. You cannot buy a vision from off the shelf and too often, people confuse thinking tactically with thinking strategically. The two terms are not interchangeable. Strategy rolls downhill from the Vision and Mission. Tactics should complement strategy.
I will use the analogy of a sports team. The team’s vision is perhaps to be the best and win the competition. Strategically they acquire the best talent, best coaches, and facilities that they can afford, then make a determined effort to train as hard as they can. Then week by week, they may adopt a vast array of tactics, enabling them to play to their strengths, depending on the make-up of their opposition, weather conditions or injuries in their own team.
Winston Churchill was British prime minister and is best remembered for successfully leading Britain through WWII.
Winston Churchill once said, “However beautiful the strategy, you should occasionally have a look at the results”
Strategy should never be ‘set-n-forget’. Businesses exist in a world that is constantly changing, within an industry with customers and competitors who have seemingly endless choices. Strategy should therefore be a dynamic, evolving process where the aim is to always emerge with a sustainable competitive advantage within in your sector.
Price taking and hoping are not strategy. Price taking is the result of competing within an extremely competitive market, against established players, but it is not a strategic position.
Cost leaders eat price takers for breakfast.
Many businesses spend countless hours, wasting valuable money getting a consultant to write a strategic business plan that they do not have the skills or experience to implement. Owners become overwhelmed. This is the #1 area where they come unstuck.
Reporting is the foundation of the – reliability element of business management. Reporting is not known for being a ‘sexy’ part of business, probably more synonymous with ‘boring accountants’ but good reporting is one of the 5 essential pillars of the financial management ecosystem. Reporting is lagging indicator like the scorecard in a game of sport that records what has happened, or has been happening, not what is about to happen. It becomes the main feedback mechanism to how your strategy is working. Good reporting will give you clarity of how your business is performing which you need to have confidence to base important decisions around.
Reporting is the foundation of the – reliability element of business management. Strategy and Reporting are 2 of the 5 pillars in the Profit Metrics method.
The ‘Profit Metrics’ method embeds reliability and predictability into business finances. It allows owners to anticipate, evaluate and navigate. It enables them to get out in front of the business, be strategic and boost their bottom line.
For more information about Profit Metrics, please click here
