what is it and how to compose it correctly?

Management accounting

BSC is not just a table with numbers, but a powerful tool that helps a business grow and achieve its goals.

Advantages of the BSC system

1. Strategic clarity. All employees understand what the company is striving for.
2. Systematization. Allows you to structure tasks and clearly define their priorities.
3. Control. It is easier to track which processes contribute to achieving goals and which do not.
4. Flexibility. The BSC adapts to market changes and internal transformations of the company.
5. Increased competitiveness. The ability to see the big picture and respond to market challenges gives a company an advantage.

For example, a company may implement a BSC and notice that low customer loyalty negatively affects profits. By increasing customer service, it will increase customer satisfaction, which will increase revenue.

1. Management support. If management is actively involved, the process moves faster.
2. A clear strategy. Without a clear vision of the future, the effectiveness of the BSC is reduced.
3. Teamwork. All employees must be involved in the process.
4. Training. We need to explain to the team how to work with the system.
5. Constant monitoring. Regular analysis of indicators allows you to make timely changes.

• Focus on long-term goals. It is easier for a company to allocate resources to important areas.
• Improved operational performance. Constant monitoring helps eliminate bottlenecks.
• Transparency. All employees understand how their work affects overall results.
• Cost optimization. BSC helps you focus on processes that deliver the most value.

Example: An electronics store uses BSC to evaluate the performance of each department. This allows you to reduce purchasing costs and increase sales.

Before creating the system, you need to carry out the preparatory steps:

• Assess the strengths and weaknesses of the business.
• Formulate clear, measurable goals.
• Conduct training so that employees understand how the system will work.
• Determine those responsible for the development and implementation of the BSC.

For example, a cafe wants to increase profits. At the analysis stage, it turns out that some customers are dissatisfied with the speed of service.

The procedure for its implementation differs depending on the characteristics of the business. We have compiled instructions for developing a BSC for small, medium and large businesses.

Small companies often operate in resource-constrained environments. It is important for them to focus on simple and accessible steps.

How to get started:

1. Determine your main goal. Select 1-2 key areas. For example, revenue growth or an increase in the customer base.
2. Select the minimum set of indicators. A small business can limit itself to 5–7 KPIs, for example, revenue, average check and level of customer satisfaction (surveys, reviews).
3. Focus on operational processes. Improve those processes that directly affect performance.
   Optimize your customer service time or increase your product range.
4. Automation on simple platforms. Use inexpensive tools like Excel or Google Sheets to keep track of your data. To visualize reports, you can connect Google Data Studio.

Medium-sized companies often face the need to coordinate several departments. It is important to organize a systematic approach here.

Read also:

Profitability in business: what is it and how to calculate

How to get started:

1. Define a strategy for each division. For example, for the sales department this is an increase in the customer base, and for production it is a reduction in costs.
2. Create a goal map. Show the relationship between departmental goals.
   Improved marketing campaigns should lead to more customers, which ultimately increases revenue.
3. Share responsibility. Assign employees who will be responsible for collecting data and monitoring indicators.
4. Implement specialized tools. Programs such as 1C:Enterprise Management or Grafana are suitable to track performance in real time.
5. Organize regular reviews. Arrange monthly meetings to review progress and adjust strategy.

For large organizations, the process of implementing a BSC is more difficult due to the scale and amount of data. A detailed and step-by-step approach is required here.

How to get started:

1. Develop a corporate strategy. Start with key company-wide goals. For example, entering international markets or increasing the share of domestic ones.
2. Break down your goals to the departmental level. Each department must understand how its objectives relate to the overall strategy.
   For example, HR may work to improve the quality of hires, which will support manufacturing’s goal of increasing productivity.
3. Create a centralized BSC management system. Develop standards and templates for data collection. This will help avoid discrepancies between departments.
4. Use advanced IT solutions. Large businesses need powerful big data analytics platforms.
5. Train your employees. Conduct training for managers and analysts on working with the system.
6. Organize an external examination. Involve specialists in BSC implementation to avoid mistakes at the planning stage. To reduce costs, it is better to hire such a specialist on staff.

Let’s consider an example of developing a BSC for different areas of business.

Coffee shop (small business):

• Goal: increase the number of regular customers.
• Indicators: share of repeat purchases, revenue, order waiting time.
• Actions: launching a loyalty program, analyzing reviews.

Manufacturing company (medium business):

• Goal: increase productivity.
• Indicators: production volume, defect rate, unit costs.
• Actions: line automation, employee training.

Retailer (large business):

• Goal: expand the network to new regions.
• Indicators: number of open points, sales volume by region, level of customer satisfaction.
• Actions: market analysis, selection of new sites, improvement of logistics.

The Balance Sheet helps companies set goals, make decisions, and build strategies. The balanced scorecard is implemented according to a specific plan, which we will consider below.

Before implementation, it is important to understand why exactly the company needs to develop a balanced scorecard. Answer the questions:

• What problems do you want to solve?
• How will company management improve?

If the number of customers is growing, but profits are falling, you need to understand whether the reason is insufficient employee productivity, high costs or low margins.

Divide your goals into 4 key areas:

1. Finance. For example, an increase in revenue by 20% per year.
2. Clients. Increased customer satisfaction by 15%.
3. Business processes. Reducing order fulfillment time by 10%.
4. Training and development. Increase in the number of trained employees by 30%.

Tip: When creating goals, use the SMART method (Specific, Measurable, Attainable, Relevant and Time-bound).

For each goal, define measurable indicators and KPIs. This will help you monitor progress and correct actions in time.

Example:

• For the goal of “increasing revenue,” the indicator is sales volume.
• For the goal “customer satisfaction,” the indicator is the CSI index (abbreviated Customer Satisfaction Index from the English “customer satisfaction index”).

A goal map is a visual representation of a company’s strategy. It shows the relationship between goals in different directions.

Example:

• The increase in revenue is due to increased employee productivity.
• Reducing order processing time affects customer satisfaction.

Use programs like Grafana or PlanFact to create visual maps of your goals. This is an important stage when the construction of a balanced scorecard is carried out.

To implement the system, you need to automate data collection and calculation of indicators. This will reduce the risk of errors and save time.

Popular automation tools:

• “1C:ERP Enterprise Management”, Grafana and “PlanFact” – for large companies.
• Bitrix24 – for small and medium-sized businesses.

Employees must understand how the BSC works and what its benefits are. Explain that the company’s goals are linked to their personal results.

If the company’s goal is to increase the number of customers, then the sales department must know how many calls and meetings need to be made to achieve this goal.

Before launching the BSC, conduct a test period. Check:

• Do metrics and goal maps work?
• Is the data collection process clear?
• Is there a need to adjust the indicators?

The Balanced Scorecard tool is not a one-time project, but an ongoing tool. Analyze regularly:

• Are the goals being achieved?
• What factors hinder progress?
• Are new indicators needed?

If the goal “increasing margin” is achieved, you can replace it with a new one, for example, “increasing market share.”

The main thing is to regularly analyze the results and adapt the system to changes in the business. With proper development of the BSC, this tool will become a reliable assistant in company management.

1. Focus on clients. Focus on satisfaction and loyalty.
2. Optimization of internal processes. Improve operational performance.
3. Personnel development. Invest in employee training and development.
4. Innovation. Constantly introduce new technologies and approaches.

Example: An IT company uses an innovation strategy, which allowed it to increase its market share through unique products.

The Balanced Scorecard is a powerful tool that helps entrepreneurs improve business management, achieve strategic goals and increase competitiveness.

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