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Edition 108 – The Dashboard

Written by Dean Robinson.

When I place myself into the driver’s seat of my Ford Falcon XR8 Sprint and fire up the 5.0 litre V8, the dashboard presents an array of data to me. The car tells me, amongst other things:

  1. My speed.
  2. The revs I’m using.
  3. Engine temperature.
  4. Odometer.
  5. The location of where I’m heading.
  6. Distance to empty.
  7. Outside temperature.

All up, my dashboard relays around 20 pieces of information to me about what is happening in and around the car at any one point in time.

Most family businesses do not have a dashboard by which they operate. The owners and managers of family businesses are happy to hurtle a car down the road at 100 km/h and have all this information at their finger tips, yet when it comes to running a million dollar business employing lots of people, the lack of information is astounding.

In my opinion, most family businesses have between 7 to 12 key business drivers – key numbers that help determine the success or otherwise of the business.

Now, what those key numbers are depends on the business itself. Even businesses that would appear to be competitors in the same industry should not necessarily monitor the same numbers. Each business is different, guided by the differing aspirations of different owners.

So, what is a key business driver? In my opinion, it is an aspect of your business that is critical to a process or outcome. The key to understanding what a key business driver is in your business is to ask yourself these questions:

  1. Would knowing this number help me to better predict what is happening in my business right now?
  2. Would knowing this number help me to better understand what has happened in my business to this point?
  3. In the absence of having this information at my finger tips, what do I not know or understand about my business?

So, when driving my car, it is important for me to know the speed I’m travelling at, the amount of fuel left in the tank and how long until I arrive at my destination. What’s not important is the name of the song playing on the car stereo, the total kilometres I’ve travelled since I purchased the car nor the litres of fuel used so far in the current tank.

When you are endeavouring to work out what are the key business drivers in your family business, remember that:

  1. Sometimes the key business drivers are past numbers.
  2. Sometimes they are present numbers; and,
  3. Sometimes they are future numbers.
  4. At no time are they all past, present or future.

The key is to work with someone to determine what numbers are important in your family business – and discarding any other irrelevant information.

This Week’s Tip

“Keep an eye on the dashboard – otherwise, you might run out of fuel before you arrive at your destination – or worse still, turn up somewhere where you least expected to be.”