Still using spreadsheets to track your team's KPIs?
As a business owner, most likely you're using multiple spreadsheets to track the performance of your team. Yes, you have to know what's happening inside the business, but isn't it also important to save your time for more critical tasks than rummaging through multiple sheets?
Watch this video as we share a more efficient way to track all your business KPIs and keep your team aligned.
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Transcription:
Hey, there. Pete Moriarty here. In this video, I'm going to be sharing with you why your spreadsheets are holding you back if you're using them for your KPIs and your database management of your team. If this is interesting to you, buckle up. We're going to be going through some cool stuff.
Now, I started IT consulting at 15 years of age. And since then I've grown not only my business, but helped support the businesses of many of our customers who have gone from small businesses, to growth mode, to then scale mode and really built amazing organizations. One of the things that becomes really important as the business grows and scales is your KPIs, is your data based management of the business. For most businesses as they're growing and scaling, it starts with just kind of looking at the P&L, and then you start to maybe move into some things like your spreadsheets and your kind of more formal reporting.
Then at one point, you may be at the point where you've got some apps or some software that you're using to manage or run the business, and that's giving you data on how people are performing. That might be something like billable hours. It might be something like number of jobs delivered. It might be something like number of units sold if you're selling a product. And so we start to track and develop KPIs. These might be something that's based on an individual's performance, like maybe a sales target. It may be a team performance metric. Or it might be … I don't know, maybe a ratio or something in the business.
Now, KPIs are really important in a business because they are going to help a scale business to know how the business is going, and where it's healthy, and where you maybe need help. It's also going to outline if you've got any individuals that are needing additional support, or mentoring, or care from the team, or maybe someone's got something going on outside of work. It's going to immediately show up in the numbers. Now, I'm not a fan of running everything in the business in terms of people management through the numbers, because I think you've got to find a place where you're managing and you're using the numbers as guideposts. But then you're still managing using a human element, and working to empower your team to work really well, empower your team to be intrinsically motivated rather than extrinsically motivated for them to perform well inside the business and for the business to achieve the goals.
But your KPIs are really important, let's say, milestones or guideposts for you to know, “Okay, where's the business going? What areas are performing, and what areas may need attention?” For me as the CEO of a business, I look at KPIs as just kind of warning lights. This is an area that needs attention in a business. It's not about, “Oh, someone's missed their target and they need to be punished.” It's about, “Okay. What area needs some love, and what area needs some attention inside the business?” And that's how I approach KPIs.
Now, if you're a business and you're listening to this video, this is most appropriate to companies that are in the scale mode. Businesses that have got through the early stages of startup and now they're reaching scale mode. What we mean by scale mode is in our technology adoption guide and our growth roadmap, scale businesses are ones that have typically more than 20 employees, and they've got business model proven. Now it's just time to basically expand, and it might be expanding into new markets. It might be just hiring more people and kind of growing out the model. It might be investing in marketing, and really ramping up on how the business is going.
But scale businesses start to run into the challenges around compliance, performance, making sure that people are on the same page. The CEO of a scale business starts to completely get off the tools and focus all of their time on culture, and innovation, and things like managing the strategy of the business, and less about the day-to-day doing the business. If you're a CEO and you're in a scale business, or you're running a scale business, then you need to make sure that you're managing by the numbers and you're aware of these numbers. I'm going to show you some of the ways where if you're still using spreadsheets for that, you may be holding yourself back.
First up, let's talk about the actual accuracy of your data. Obviously when you're a business and you're doing your first couple of KPIs, you're probably going to be running reports manually. Maybe you're pulling data out and profit numbers from your accounting platform, or maybe you're taking things like the number of hours that different people are billing, and you're running into an app and you're running a report. As you do your data analysis, you're probably pumping those into a spreadsheet. Maybe you're creating some graphs.
If you're using something like Google Sheets, that's really easy to do because you can drop the data in via form and ensure that the data comes into your sheet in a uniform way. Or maybe you're manually entering data into a Google Sheet, and that's okay as well, and generating a live updating chart inside the Google Sheet, which is basically showing what the data is and manipulating that for you in real time. That all works fine until you delegate that task onto someone else. Because if you're the business owner, you're probably not going to want to be spending all the time working with your data yourself manually. This is the kind of thing that you should have someone else prepare for you, and you just kind of see what the data is at.
The problem with relying on human input in making sure that the KPIs are tracked in an accurate way is that, well, sometimes people might get things wrong. Maybe they don't show up on the right day to work because they're sick or they're on holiday, and the data doesn't get entered at the right time or on the right day. Or maybe you have the problem where you enter the data, and you accidentally typo, and you type in the wrong number, or you get an extra zero in there.
I've had some weird things happen on my dashboard here behind me where the numbers have just been completely wrong and there's been a big spike in the graph. Now, when you're using human intervention, there is the possibility for human error. That's one of the biggest risks of doing KPIs on a spreadsheet or doing them manually is because that actual human element there is just always going to be a potential risk area for you.
Next up, let's talk about actually getting your data on time. Now, if right now you're getting your data and you're collecting it from different apps and systems … because most businesses have a few different apps that they need to use. Your accounting is in one platform, your delivery management is in another platform, and you've got to draw in from all these data sources to the one place. The challenge that you can find is that it takes time to actually bring that data in. Someone has go and manually run some kind of report. And if that's not automated, then the challenges with that is you may be a week, or two weeks, or even longer out of date with what's actually happening inside the business.
You could completely miss critical changes that are happening if you're not on the ball and actually getting real time data. Now, an example of this is cashflow. If you're in a business and you need to regularly collect from your customers … which cashflow is important to all of us, unless you're completely funded like a crazy Silicon Valley startup and have $50 million in the bank account. But for most of us, cashflow is the absolute heartbeat of our business. Particularly when we're in a fast growth mode and we need to make sure that we're actually funding hiring staff, funding our marketing campaigns, and making sure that we're getting return on investment for our dollars.
Now, imagine if you had a 30 day delay on knowing where your cashflow was. Imagine if in 30 days you would know whether or not you collected the cash from the invoices that you sent out you didn't know right now. Now, imagine trying to run a business like that if you had a 30 day delay on that. Imagine trying to budget. Imagine trying to make strategic decisions. Imagine if something went wrong, and your invoices didn't go out for a month, and you didn't find out till 30 days later.
That kind of cashflow impact could completely kill a business, particularly small businesses who often don't have more than a whole month's expenses sitting in the bank accounts. It's just not how small businesses tend to run. You could run into real challenges there. I'm always a fan of real-time data, making sure that you have data immediately available to you so you're never waiting and wondering. So when it's time to actually turn the ship a little bit if you need to make some changes based on the data that you're seeing inside the business, you can do that quickly without having to wait till the end of the month.
I want to start to move away from some of the problems and move to some of the advantages of using something other than a spreadsheet. What I'm getting at here is using a dashboard like the one that I've got right here on my TV. And using a business dashboard instead of a spreadsheet for your KPIs gives you some very unique advantages. Let's first talk about data analysis and manipulation. Now, when you're a business owner and you're looking at the numbers, we want to put our data scientist hat on and go into analysis mode. What that is going to allow us to do is actually look into the data, but try and get insights from the data.
Ideally, we want to be asking questions and having the data give us answers. With that if we just have a spreadsheet, for us to manually manipulate that data. We're going to have to dick around with pivot tables, and moving stuff around, and doing that manually. That can be a bit of a pain. With a database dashboard, what we can do is use pickers, or modifiers, or filters within the dashboard to bring up different kinds of data and manipulate the data that we have in front of us with no risk of breaking a formula, or messing around with a cell, or guessing how to set things up in a spreadsheet.
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