The Balanced Scorecard
In this short video, Michael explains the Balanced Scorecard.
The Balanced Scorecard is a process to align business activities with your vision and strategy. It’s a very practical way of ensuring that the way you run your business leads to the results you want.
I use The Balanced Scorecard as way of bringing what we’ve discussed so far into a workable plan that we’re able to execute.
Start by writing down your vision for the business and what you want to achieve for yourself.
Then write down under the 4 headings listed below what you need to do to move towards your vision and achieve what you want for yourself: For each, write down some objectives, measures, targets and key initiatives.
- Financial. What are your financial expectations? As a minimum, include revenue, costs, profit, cash flow and borrowings. Cash flow is key, and I’ve included further details in the next section.
- Customers. What drives your marketplace? How are our customers changing? What is influencing them and how is that changing? What is the likely lifetime value of our ideal customers? How do we attract and convert potential customers? How do you measure customer satisfaction? How do you maximise customer retention?
- Processes. What are the key processes you need to develop and maintain and build your business? How are you going to build and maintain them?
- People. What do you need to do to ensure that you and your people are getting accurate feedback on what you’re doing, learning what you need for the future and keeping you healthy and resilient?
When you’ve written them out, produce a one-page summary as a reminder as to what’s important to the business.
Useful questions to answers for the balanced scorecard.
As part of the balanced scorecard, here are some of the most useful, but difficult, questions clients answer. It may be helpful to get someone to help you think them through:
Under customers the key issue are:
- What is our brand?
- What is our customer proposition?
- Which customers do we want to work with?
- How do we reach them?
- How are we better than our competitors?
Under financial the key issue is often cash flow, and a key component of that is knowing how much to charge.
Going Solo Section Index
NLP Going Solo 1: Start with the end in mind
NLP Going Solo 2: Balanced Scorecard
NLP Going Solo 3: Customer Proposition
NLP Going Solo 4: Your Brand
NLP Going Solo 5: Choosing Customers
NLP Going Solo 6: Reaching Customers
NLP Going Solo 7: Cash Flow
NLP Going Solo 8: Summary