Refine your strategy with a balanced scorecard

Last modified:

Thursday 31 October 2019

Being the good entrepreneur that you are, naturally you want to know how to grow your company. Is business going as you expected, or do you need to change certain things? Preparing a balanced scorecard on a regular basis can help you with this

A balanced scorecard, in technical jargon, is a system through which a group of homogenous financial and non-financial indicators give you an overview of the reach of a series of quantitative and qualitative objectives.

Many companies only use data that they can access quickly: financial indicators such as turnover and net profit. The problem is that this data does not provide a second glace backward. So it is often too late to remedy the situation. The balanced scorecard offers a solution to this disadvantage.
In addition to the financial indicators, the entrepreneur also benefits from indicators measuring customer approach, internal processes, and the company's innovation capacity. The information provided by this balanced scorecard helps with decision-making on several levels: management, financial and commercial partners, and personnel.

A series of elements from this table are more or less identical for every company. However, naturally there are elements which are unique to the company's sector, its size, its stage of development, etc.

The basic elements of the balanced scorecard

The basic elements of the balanced scorecard include :

  • Commercial and strategic indicators

    Using these indicators, you can see your company's position both on the market and relative to the competition. For example: number of competitors, your market share, new market actors, etc.

  • Efficiency and growth parameters

    The parameters measured in this context refer most notably to turnover, turnover relative to other elements, payment deadlines, etc.

  • Ratios concerning the financial structure

    These parameters must indicate if the company is profitable and solvent, as well as assess its cash flow

Advice for developing a scorecard

Some advice for preparing and using balanced scorecards

  • Synoptic

    A balanced scorecard must offer clear and structured information.

  • Synthetic

    A balanced scorecard must be a summary, and avoid the trap of providing useless information. Limit yourself to the most interesting and striking indicators. Aim for a length of two pages.

  • Comparative

    A good balanced scorecard should allow for indicator comparisons. This may include a comparison over time, a comparison with a standard, a comparison with the budget forecast, or a comparison with the competition, which may be used to assess the position of your company more precisely and more reliably.

  • Updates

    Your balanced scorecard should be updated every week or every month so that it remains fully up to date.  

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