Employing the Balanced Scorecard for a start-up company
It is often believed that a Balanced Scorecard approach is only viable for big corporations that have been in business for years; hence, not many start-up companies are willing to use this tool. In addition, many start-up companies are too focused on creating and developing their brand that they forget about building basic pillars for a solid structure.
This runs counter to what many in the field believe as being the better strategy, as developing the company structure from the very start can define how productive and successful that company can really be.
The following are five ways in which a Balanced Scorecard can be used in start-up companies:
Target the four elements of the BSC
Oftentimes in a start-up company, they will focus on one objective at a time. Yet, it is better to create a balance of essential elements to not only generate big sales, but also attract new customers, whilst satisfying the existing market base.
This is what the Balanced Scorecard does, it lets the company balance out the elements that it needs. Kaplan and Norton, the founders of this tool, believe there are four elements that every start-up company should consider.
- Customer’s perspective – how current and future customers view the product and company
- Internal business perspective – what are the certain points that must be transcended
- Innovation and learning perspective – find ways to develop value and improve the company/product
- Financial perspective – how do shareholders perceive the company
These perspectives will create important pillars that the start-up should focus on. It is a method to not only fulfill its sales goal, but maintain, grow and develop it.
Adapt the scorecard to the start-up company
It is important to use the scorecard method to the company’s advantage. Hence, shaping the scorecard to fit to the start-up company is crucial. In order to do so, they should adapt the four aforementioned elements based on your business values, needs and objectives.
Use it from the very beginning
The BSC is designed to bring clarity to operational and organizational processes, when used from day one. Therefore, it is not enough to just have one in place.
If used in a department’s daily tasks, those respective employees will quickly understand how to keep track of performance, maintain and develop it. It does not take much for this endeavor – a few minutes every day will suffice.
Experiment with Ideal Target Numbers
Having a balanced scorecard on hand does not mean that you will always strike wins in your business ventures. It is all about experimenting and finding your ideal target numbers.
Since a start-up company is just barely entering the business environment, it is recommended to estimate an ideal target numbers right from the get-go. Then, once you start progressing through your field and the status-quo improves on a daily basis, the target numbers can change to suggest better aims. These ideal targets are designed to create practical ways to achieve success.
Trust the BSC
After implementing the Balanced Scorecard in the start-up company, the next step should be to understand how and where the company should be heading, focusing on future plans, which of course can be developed with the help of the BSC.
Although this instrument has been around for many years, any start-up company can use this method to their benefit, without worrying about it being outdated.
As the Balanced Scorecard emphasizes the company’s unique elements, the people within that organization can map out directions on how to utilize them in the most efficient and efficacious manner possible. The sooner they determine them, the sooner the start-up company can embrace and maintain success.
If you’re the owner of a start-up and would like to measure your newly created company’s performance by using a Balanced Scorecard methodology, knowing the ins and outs of a Balanced Scorecard and how it can best be used to propel an organizational entity to a higher level of performance is of paramount importance. As such, The KPI Institute has developed a series of webinars and templates that focus on numerous aspects related to the BSC, from design & implementation, to managing KPIs within it and how its components work.
If you are curious to learn more and become a Balanced Scorecard specialist, our Certified Balanced Scorecard Management System Professional Certification Course and the Balanced Scorecard Masterclass will see to it that you have the necessary knowledge to make informed comparisons between various BSCs, understand each and every one’s functionality and use that information to build the best possible Balanced Scorecard for your organization!