Do you remember the first car you drove? Everything about cars was simpler back in the day.
- Bench seats with no adjustment
- Engines most people could work on, and
- A simple dashboard with a speedometer, temperature gauge, oil light and a rev counter if you were lucky.
That’s pretty much all you needed
Cars have moved on and the dashboards of some modern cars now resemble a fighter jet with an array of multi coloured lights. While we used to drive by ‘feel’ listening for odd noises and behaviours, now the dashboard signals problems to us by a multitude of flashing lights, beeps and messages, and goes into limp mode if we ignore them. You simply cannot drive a modern car without the dashboard.
Business is more complex too. Gone are the days of recording figures in journals and adverts in the Yellow Pages. Today it is Facebook and Google, tomorrow something else. Business owners can’t rely on gut instinct, they need to know exactly what their business is doing in order to make rapid informed decisions to prevent issues escalating. This is the role of the Business Dashboard, it shows you at a glance, the current performance and health of your business.
What Does a Business Dashboard Do?
Instead of you having to try and hold all the numbers and information about your business in your head, the dashboard does this for you.
It simplifies the complex processes in your business into manageable and digestible chunks of information. For example, these may be the measurable steps that lead to a sale:
- advertising spent
- leads generated
- prospect discussions held
- quotes given
- invoiced amounts
- payments received
By showing these metrics in a dashboard you can see how you are tracking daily, weekly, monthly or annually. If you notice your leads are down for the week you can take action before the impact of it shows up as decreased turnover several months later.
A simple dashboard may just show monthly budget and turnover compared to previous years. A more complex one will show multiple indicators for multiple processes across the business and may have a Leaderboard so staff can see how they are performing against each other.
Unlike older spreadsheet graphs that were prepared each quarter, modern dashboards draw on live or near live data to give you immediate feedback from which you can make operational decisions. Often this is done automatically through software like Quickbooks or Xero or by staff updating the business software as they go.
How To Implement A Dashboard
While you can pay someone to come in and set them up you can do it relatively easily and cheaply yourself. Here is what you need to do:
- Identify Key Performance Indicators (KPI’s) – what are the numbers that, if you ignore them, your business will be in trouble? These will vary from business to business but some common examples are:
- Margin – are you making a healthy sustainable profit? You need to know this at least each month and for some businesses, for each job.
- Customer Acquisition Cost (CAC) – what is it costing you to gain a new customer? You need to know so you can change quickly if you have to. Facebook provide excellent dashboards for this, my son changed a title on a paid advertisement and the CAC went from $60 to $30! That’s a saving of $3000 over 100 clients.
- Cash Conversion Rate (CCR) – if you hold stock you need to know how long it takes to get back the money you spent. Many businesses have gone under due to poor CCR.
- Accounts Payable – when are your invoices being paid, on time or late? How late?
- Customer Lifetime Revenue (CLR) – how much is each customer worth to you? Are some more profitable than others?
- CREATE SYSTEMS TO MEASURE YOUR KPI’S –there are a number of questions you need to answer:
- how will you measure the KPI’s – manual or use apps?
- who is responsible for inputting and collating the data?
- When will measure them and input the data? Weekly, monthly?
- How will you present them? – Excel reports or in app?
- Who will manage the system and hold people accountable?
- Test, Evaluate & Tweak
- Are you getting the data you need?
- Is the data and dashboard accurate?
- Are you using the dashboard for decision making? If not why not? This is where you find the weakness in your systems e.g., you see your ‘Invoice Payment Time’ KPI is 60 days when your terms are 30 days from completion. You find out that, a) invoices are going out on average 14 days after the job finishes and b) clients are paying 16 days late. You now have a new KPI, ‘Invoice Sent Time’, to measure and work on which will improve you Invoice Payment Time.
- Improve and Use – Once you start using dashboards you will rely on them more and more to make informed decisions. You will still use your ‘gut’ too because you will see the dashboard and think, “Something’s not right here, that should be going up not down” and investigate to see what is going on, maybe the data is wrong or maybe something in the process has changed and you can now address it before it has a larger impact.
Most corporates spend large amounts of money to set up and maintain dashboards to measure KPI’s because they know if they don’t they will be less efficient and fall behind their competitors. The good news is you can set your own up or use relatively low priced software options that not only make your business more efficient and effective, they give you greater control over managing the day to day operations. They’re a no brainer really.
If you have any questions or would like to know more about how dashboards can help you drop me a line at firstname.lastname@example.org