A quick glance is all that is needed to check a vehicle’s fuel gauge, engine temperature or RPM when driving down a road. A car’s dashboard is designed to focus on what’s important and what the driver needs to know to have a safe trip.
A car’s speedometer, fuel gauge, oil pressure, and other items, if applied to business, would be called key performance indicators (KPI). Unlike a car, the KPI of a business vary depending on its business goals and what’s important to the business owner. Common KPI include a business’s cash balance, how fast it gets paid, Gross Profit percentages, debt summaries, A/R balances, and more.
There are literally hundreds of KPI to choose from in any given industry, and many cannot be solely identified by perusing a company’s financial statements – these can include the number of orders being produced, clients’ satisfaction level, or the organization’s employee turnover rate. View a generic version of the very same dashboard we developed for our clients.
However, creating a dashboard of KPI can help business owners better understand what’s working for their business and which areas need more focus. To help get started, Lucrum Consulting has outlined the following steps to use as a guide when creating a business dashboard:
- Select the KPI to track. Choosing 6-10 items to create and track is a good place to start.
- Select a tool that provides the KPI in the desired format. There are many great add-ons that can be tacked on to a business’s existing accounting software to instantly crunch the financial KPI and present them in insightful formats, such as charts, graphs, dashboards and reports. Or, export out of the accounting system into an easily customizable format like Excel, and manipulate the data there.
(While there are typically many great KPI already available in any given business’s accounting system, there are also some real gems that can be found outside an accounting system that can take a bit of work to calculate.)
- Create any new processes to calculate the new KPI and get them entered into the dashboard app.
- Hold a regular review meeting to go over the KPI and determine any action based on the review. This review should be consistent and match up with the data being reviewed. For example, perhaps there is one set of KPI to illustrate operational performance but another set that pertains more to the monthly financial health of the company. Clearly the operational data should be reviewed more often, perhaps weekly to steer the company and maintain the generate the results that show up in the monthly data.
The last step in the process is vital. It’s important to remember that KPI produce invaluable data that can be used to guide the company. So take a hard look at the numbers and results, and use the information to make smart decisions.
Entrepreneurs who strike a balance between keeping one eye on the road and planning ahead, while keeping the other on their business’s dashboard will excel in the marketplace.
If your business thinks a dashboard would help contribute to its bottom line, the Lucrum team can help you through this process. Feel free to reach out to us at 704.927.0462 any time to discuss the possibilities of having a dashboard created for your business.