In today’s information age, managing information can be overwhelming. Here are some tips for making sure your records and information collection and retention makes sense for your business.

Information lets you plot where you are on the improvement road. Unless you maintain records and information on how you do things and what you do, you will be working in the dark.

If yours is a small business, chances are that information management is something you’ve been doing instinctively, but never really thought about. Most businesses believe in staff management, sales management, cashflow management, and production management — but information is often overlooked because it is more difficult to come to terms with.

Information management is important, and successful businesses make better use of information to improve their efficiency, products and customer service.

Critical questions for you to consider are:

• Do you manage your information well?
• Do you measure the performance of your business in a balanced way?
• Do you know how you compare to your competitors and other high-performing organizations?

Are You Managing Your Information Well?
The key issue is whether you let the information flow by dribs and drabs to meet particular needs, or whether you manage it like any other major resource.

Questions you need to consider to gauge whether you manage your information well:
• Do you get the information you need when you need it —or is it too late to useful?
• Is the information accurate enough for your needs— or is it too approximate to be useful?
• Is it analyzed and summarized so it’s easy to use— or are you overwhelmed with irrelevant detail?
• Do you and your staff work off the same information— or do you work off different/ contradictory information?
• Is important information available to all staff that need it—or is it hidden in files and people’s heads?

The process of getting accurate, timely and relevant information to all staff is what information management is all about.

When you start to try and manage your information, you’ll find you need to break it down into manageable areas (e.g. cost information, customer information, supplies information). You can then think about ways to collect, store, process and disseminate it in each area—information systems. You also need to decide which ones are important enough to justify being formally managed and controlled.

Performance Measurement
Performance measurement plays an important role in business improvement because it helps you:
• Identify and track progress against goals
• Identify opportunities for improvement
• Compare performance against internal and external standards.

Often businesses measure performance solely through their financial performance— either profit, return on investment, or cash flow.

But financial performance measures, based on cost accounting, provide little to support your business improvement efforts. This is because they do not measure improvements seen and valued by the customer.

At best, financial indicators are two to three weeks out of date, and are probably designed more for the accountant than you. It has been said, “running a business using monthly accounts is like driving a car using only the rear-view mirror.” You need “leading indicators”—like measures of customer satisfaction or complaints—providing you with the earliest possible indications that trouble is looming.

Many firms are adopting a balanced approach to performance measurement, suggesting that a business measure its performance from four points of view:
• Financial and cost (e.g. revenue, profit and loss, cash on hand, return on investment, cost per unit of output, inventory cost). Refer to financial performance measures, below, for more information.
• Customers and market (e.g. customer satisfaction, customer complaints, market share, comparisons with competitors, response time).
• Staff (staff satisfaction, staff turnover, skills development, absenteeism, morale).
• Process and innovation (percentage on time, rework, cost of quality, new products and services).

There is a range of quantitative measures (e.g. pre-tax profit, cost of quality, turnover) but you should also think about qualitative measures which are equally important (e.g. answer the phone within three rings, process an order within 12 hours of receiving it, follow up an order within three days of it being processed — all to ensure good quality customer service).

You need to choose your performance measures carefully—what you measure will significantly affect the behavior of your staff. People will tend to behave so that they look good in the measurements.

Financial Performance Measures
At the end of the day, you are in business to make a
living, so the financial health of your business is critical. Typical financial measures are profitability, sales revenue growth and return on investment. They are all important to the ability of a business to survive and prosper.

Once again you need to think about what is important to you — you don’t need a multitude of measures, just those that really help. For example: survival might be measured by the amount of cash the business has, success by the monthly value of sales, and return on investment by annual profits as a proportion of the amount of money the owner has invested in the business.

There are some basic things you should think about in relation to the financial position and health of your business. These include:
• How much cash do you have and what is likely to happen to your cash position over the next month —knowing this you will be able to manage your cash and ensure you anticipate cash shortages and surpluses.
• A simple and regular
statement of income and expenses—ideally for each month, but at least once every three months. This will give you a clearer idea whether the business is growing, contracting, or standing still. If you have a simple budget that allows you to compare the actual result with where you thought you would be, you have a powerful document to help you manage the business financially.
• It is also important to look at your business from two financial points of view:
1) As a manager of the business, you need to ask: “What amount of cash do I need to run the business effectively, and where am I going to get that cash?” The sources of cash available to a business stem from either the owner, or from loans. Both will need financial information proving you can pay the money back—and in loan sce-narios, you will need to plan for interest payments on the amount borrowed.
2) As the owner of the business, you should expect a financial return based on the investment you have made in the business. It is important to look at the financial performance of the business from this point of view because, as an owner, you are taking a risk investing your money in the business. And you should reasonably expect a return to reward you for taking this risk. You achieve a cash return from depositing your money in the bank —so the return from investing money in the business should be much greater than interest you could earn from the bank.

How Do You Compare?
Comparing your business against other businesses— which is known as benchmarking—can help you assess the size of the gap that separates you from other businesses, and alert you to competitive threats and new practices. Comparisons can be focused on products, services, business process-es or the performance of competitors or leading busi- nesses in other sectors.

Key steps involved in benchmarking answer the following questions:

What Are You Going to Benchmark?
You can benchmark almost any measurable activity (e.g. financial and cost measures, customer and quality measures, staff measures, and innovation measures). In practice, however, you will normally focus on those elements you have to excel at to be successful in your business. What would make the most significant improvements in your relationship with your customers? What would make the most significant improvements in your bottom line?

Who Are You Going to Benchmark Against?
There is a wide variety of methods to identify whom to compare your company against. One obvious method is to ask customers who they think is best in that activity. Another is to ask advisors, such as accountants, industry associations, or academics. It may not be immediately obvious whom you should benchmark against and frequently the answer may lie outside your industry.

How Will You Get the Information?
A great deal of the information you need is already there for the asking, in magazines and newspapers, in trade association reports, the Internet and via specialist databases. You can also gather information from customers, suppliers, staff and other advisors. But the most valuable information often comes through direct exchange of information with companies that recognize the mutual benefits of sharing information.

Copyright © ASTM, 2003