Captain BUZ's Blog
Perspectives about small business start-up, growth and success.
A Business Dashboard???
April 28th, 2008
Jeremy from Louisiana wrote to me with the following question: What type of bookkeeping/accounting system do I need?
Dear Jeremy:
Using a reliable bookkeeping and accounting system in your business is key to supporting profitability as well as remaining compliant with reporting requirements such as those imposed by the IRS along with possible state and local reporting requirements.
Debits / Credits and all else aside, adequate bookkeeping is a matter of keeping track of all business revenues and expenses in an organized and systematic fashion. This can be as simple as using your check book to itemize all activities and simply summarizing these activities periodically - usually monthly. There are many ledger-based systems, some simple and some quite complex, depending on the needs of the organization.
Many of these systems have been automated so that simple entries are grouped into the right categories with a resulting P&L and balance sheet reports available at the push of a button. QuickBooks is a good and very popular example of this type.
Today, such systems have advanced to another level to become true management control systems for the total operation, such as Netbooks. Small businesses may feel that they don't really need these comprehensive systems, but they quickly change their mind as they understand the ease of data entry and reporting. Data is entered where and when the data is created and so removes the need to later have another person enter the data. Further, it is possible to have an up-to-the minute picture of the total organization's performance with the push of a button or use of a comprehensive dashboard feature.
A business dashboard is an ultimate management control tool. In your car, complex systems are continually monitored by onboard sensors and problems are reported to you via "idiot lights" to show low oil or some other problem, or via a message center that tells you that you are out of windshield washer fluid, the ABS system is malfunctioning, or any other problem. You do not have to continually monitor every system of the car to make sure that everything is OK. The same can be true for your business.
To start, the business develops a comprehensive detailed budget (Check out our Breakeven article). The comprehensive accounting system collects data as it is generated and compares the results with the plan. Differences or deviations from the plan are reported on the dashboard on your computer screen. Thus the business does not have to look at all of the operating data of the business - as has been done in the past - and a long and difficult job as well. But instead, needs to only look at those areas that differed from the plan / budget, a far more efficient and effective process. Because this is all happening in real time, the business can take immediate corrective action, rather than waiting until the end of the reporting period - and often long after as the reports are eventually prepared.
We managed to discuss all of this without talking about ERP (Enterprise Resource Planning), MRP (Materials Requirements Planning), CRM (Customer Relationship Management) and Knowledge Management - until now fancy MBA terms that really didn't mean much in a practical sense. But today, these terms equal effective and timely management in any organization of any size, and that translates into increased competitiveness and improved profitability - great goals for any organization.
Sincerely,
Captain BUZ
Stay  ed ~Subscribe
for FREE Resource
Updates
page updated:
September 05 2008
|
Texas
Leading Small Business Resource Portal
