The Accounting Blog

Categories

Greatest Hits
For Start-Ups
For Business Owners
Management Accounting
Online Accounting

Accounting Links

Accounting Today
Journal of Accountancy
Accounting Technology
QuickBooks
Intacct
Tax Almanac
AICPA
CalCPA
IRS
Franchise Tax Board

Blog Links

CPA Marketing Best Practices
The Solo Accountant Reporter
CPA Trendlines
QuickBooks Online Blog
Cash Flow Blog
CPA Firm Technology Blog
CPA Marketing Blog

RSS
ATOM

« The Five Stages of Growth | Main | WalMart's Pricing Strategy »

Blink Accounting

In his new book, Blink- The Power of Thinking Without Thinking, Malcolm Gladwell encourages readers to use less information when making decisions. The trick, he says, is to filter out the irrelevant and focus on the meaningful. What on earth does this have to do with accounting? Plenty. Here's why: one of the biggest challenges with accounting is not getting mired in all the details. The simple truth is that most companies don’t need more data and reports- they need less, so that they can focus on the big picture. That's why things like key performance indicators (KPIs) are much more useful to business owners than financial statements: because they provide at-a-glance feedback on how the business is performing. Blink.

Posted by Will K at 04:58 AM November 10, 2005

Comments

KPI's are great for tracking trends, but you still need to benchmark those KPI'against competitors, the industry, your budget or business plan. Otherwise, it's just another bunch of numbers either going up, down or just staying the same.

Generally, a company only needs a few (less than 5) KPI's for keeping a pulse on the business. And be careful not to use more numbers to analyze KPI's (eg. sales are down because we shipped less units). Focus on "why" you're shipping less units.

Posted by: Krista at 02:23 PM January 24, 2006

I find that if I can graph something I can use it to make decisions. If I'm presented with a table of numbers, it's very difficult to be able to grasp what it means.

KPIs are great because they're graphed, as well as because they are often 'just enough' information.

Posted by: Evelyn Mitchell at 09:31 AM November 1, 2005

Post a comment