Tag: mike duncan

  • Budgeting – Your Northern Star (Guest Post)

    A budget plants an iron rod of confidence and accountability into the spine of your business.

    I recently blogged about Six Ideas for Setting Successful Budgets:

    1. Budgeting begins with assessing the current business environment
    2. Leave your optimism at the curb
    3. Budgeting must be driven by strategy
    4. Connect the dots
    5. A careless budget will cause more pain
    6. Don’t forget the smell test

    Today, I expand on ideas 4 and 5, which deal more with the actual preparation of the budget; the practical challenges.

    Connect the dots

    Because we assemble budgets at the line item level, we risk believing the process is simply the aggregation of line item budget amounts. This fragmented approach will yield a fragmented result, with little value to you or the business.

    Budgets are not forecasts or estimates of what could happen. The budget is your plan of what will happen. Accordingly, the budget process actually starts from the top. A quality budget will tell a complete and coherent story at the highest level – like a navigator’s map, reflecting your point of origin, your destination (goals), the terrain (environment), distance to travel (measure progress), direction, optional routes (when stuff happens) and landmarks (reference points).

    Northern Star
    The Budget – Your Northern Star?

    Getting the big picture requires that you understand the correlation/interaction of its components – the line items. For example, if you are increasing your direct marketing budget, have you also considered?

    • A possible corresponding reduction in display advertising
    • Costs for crafting direct marketing campaigns (usually more work than display ads)
    • Staffing costs for timely follow up on leads form direct marketing campaigns
    • Costs incidental to the staffing increase (tax, benefit, training, etc)
    • Effect of strategy on the fulfillment/sales/collection cycles

    There are few items in your budget that truly stand alone. Make your budgeting process worth the effort you are putting into it by connecting all the dots to plot next year’s journey.

    A careless budget will cause more pain

    Understandably, the budgeting process can feel like a tedious, time consuming and futile effort. “Why set a budget? I can’t control what is going to happen to my business. We respond how we have to respond and spend what we have to spend anyway.”

    This attitude will doom your efforts. The very purpose of budgeting is to gain control. As I noted, budgets are not just casual estimations of what might happen. A quality budget plants an iron rod of confidence and accountability into the spine of your business.

    Sure, “stuff happens” to your business, but you control how it responds. Succumbing to the belief that budgeting is a pointless exercise will result in a careless effort to “just get it done.” The real pain will come the following year when stuff does happen and the maps (budget) you are using to navigate your business lack a Northern Star to guide you.

    This was part 2 of the 2011 budgeting series on the Performance Ideas blog. More to follow soon.

    About the author of this post:

    Mike Duncan is Partner and co-founder of Bizzeness, LLC. Mike began his career with KPMG and Deloitte. He has been a business owner and advisor for over 30 years serving over 300 businesses in various capacities. Mike focuses on SMB’s with concept development, business modeling, start-up, market adaption, strategy and succession. Mike lives in the Kansas City area. You can contact Mike at mike@bizzeness.com.

    Mike has written a prior guest post on this blog.

  • Guest post about data visualization on bizzeness.com

    If you follow this blog you might remember that Mike Duncan from the small business consulting firm Bizzeness posted two guest entries back in August. Mike shared some interesting views about Dashboarding and the selection of proper KPIs. Those were amongst the most popular entries this summer.

    GUEST POST

    Today I was finally able to return the favor. Check out the guest post on the Bizzeness blog. The article is about one of my favorite topics: Data Visualization. While you are on that site, make sure to take a good look at their blog. There is great content!

     

    bizzeness.com

  • Dashboarding – Insights from Mike Duncan – Part 2

    Each indicator must have a strong correlation to your ability to effect change

    In my last post I laid out 3 practical and compelling questions in developing your dashboarding program:

    1. How should my company be using a dashboard(s)?
    2. What is the basic process for choosing my KPI’s?
    3. What are some common mistakes I should avoid in my dashboarding?

    Today I conclude with Questions 2 and 3.

    Selection of KPI’s

    KPI’s are dictated by the strategy of each business against the backdrop of standards or benchmarks for its industry, so every dashboard is different. Your KPI’s are singular to you and your business. While you can look to examples for general guidance, you need to work through the process of defining KPI’s for your own business.

    These questions may help you start your KPI identification and selection process:

    1. At what level of responsibility is the dashboard being used?
    2. What are the strategies and objectives that are driving the data requirements?
    3. What data provide the best indicators of performance for these requirements?
    4. How can this data be portrayed to maximize readability and minimize response time?
    5. What is the strength of the correlation between the data and your ability to influence change?

    The first two questions presume that you have already completed other required steps, such as developing a strategic plan and defining the related goals and objectives. Data points floating against dark space are meaningless. They must be oriented against your goals and industry/competitor benchmarks. The last three questions address the qualitative aspects of KPI’s.

    Perhaps the most basic consideration is reflected in the last question. Each indicator must have a strong correlation to your ability to effect change. Stated more simply, the whole purpose of dashboarding is built on the assumption that you have the ability to quickly influence outcomes as you respond to information from key indicators.

    For example, daily magazine advertising dollars spent is probably meaningless because display advertising doesn’t move sales on a daily basis and the lead time to place such ad sales is at least 6 months. You lose on both counts – sales and costs.

    Common Mistakes in Dashboarding

    These are some of the most common and harmful mistakes in dashboarding:

    • Overloading the dashboard – This is the most common mistake. Getting the most from the least is your goal. Loading every metric about your company onto a dashboard will only confuse and delay your response; equals damage to the company.
    •  Expecting too much – Dashboarding has a very specific purpose and value. It does not replace regular reporting. Don’t try to manage your business entirely from the dashboard. This will push you to put too much onto it and you will tend to lose sight of longer term trends.
    • Misreading the data – You can minimize the risk of misreading data in the KPI definition process. Choose data that is easy to interpret and consistently reliable.

    Responding incorrectly – Lives have been lost more than once from a pilot pulling up the nose when the warning system is telling him to increase altitude. He should have first put the nose down for speed to create lift needed for altitude. He thought “up,” pulled the stick and stalled the plane. Know how you are going to respond to an indicator before going live.

    Conclusion

    There are books, classes, and careers dedicated to the practice of dashboarding. It is a very important business practice and can become an invaluable business tool to make your life easier and your business more successful. Spend the time needed to do it right.

     

    Bizzeness - Mike DuncanAbout the author of this post:

    Mike Duncan is Partner and co-founder of Bizzeness, LLC. Mike began his career with KPMG and Deloitte. He has been a business owner and advisor for over 30 years serving over 300 businesses in various capacities. Mike focuses on SMB’s with concept development, business modeling, start-up, market adaption, strategy and succession. Mike lives in the Kansas City area. You can contact Mike at mike@bizzeness.com.