How a Business Dashboard Can Keep You in the Fast Lane

Don’t wait until the end of the month to check your company’s vital signs. Dashboards tell you what you need to know, when you need it. How often have you felt you had to make business decisions with less information than you’d like because you were waiting for end of month numbers? What if instead you could view timely information customized for your business whenever you wanted to? Business “dashboards” make this possible, providing key information in a concise and easily understandable format.

Very simply, a business dashboard offers focused information critical to the success of a business through a series of reports that are created and analyzed on a regular basis. These reports (sometimes referred to as “flash reports”) are customized to fit the needs of each individual business, and can be updated at varying intervals — monthly, weekly, daily or even a couple of times a day. For many business owners, whether they sell plumbing parts or professional services, the reports are crucial to their company’s health, giving them the real-time knowledge they need to make faster, better decisions.

The analogy to a car’s dashboard is a good one. When you’re driving, you can take a quick glance at the speedometer to see how fast you’re going, at the fuel gauge to find out how much gas is in the tank, and at the tachometer to learn how hard the engine is working. Imagine how convenient it would be to see real-time information on how fast your sales are growing, how much cash you have on hand (any company’s fuel), and what your business’s production utilization rates are (a company’s tach).

Here’s an example of the basic benefits of flash reports: Let’s say you manufacture widgets and your plant has the capacity to make 10,000 of them a day. Your income statement will tell you only how much revenue you made, not whether you actually produced those 10,000 widgets each day. But a dashboard report can. So if you discover that widget production is stuck at 9,000, you can make whatever changes are necessary in your plant operations to bring production levels up to where they should be — perhaps checking your company’s cash position via the dashboard to see about hiring a third shift or buying inventory. And you can do it sooner rather than later, when it could seriously affect your bottom line.

Big companies have known about the benefits of dashboards for years, but the cost of such custom-built systems was out of reach for many small companies. Now, companies like NetSuite, Sage and Salesforce.com make dashboard products that can cost in the range of $1,000 to $2,000 per user annually.

There are even-lower-tech solutions. For many small businesses, flash reports take the form of a series of regularly updated Excel spreadsheets. The template is created by your accountant, with regular input from senior employees and department heads. These can be viewed either via computer or in a printed format; there’s also often an executive summary that highlights changes, trends, shortfalls and other key indicators, which provide the basis for decision-making.

Understanding Your Business

The most important thing in constructing a dashboard or getting flash reports is knowing what numbers to include. To choose them, it is critical to understand what factors in your business drive profitability. Sales, accounts receivable and inventory are crucial, of course, but there are other factors that impact the bottom line. These essential factors vary between industries and even between individual companies. While many business owners have a sense of key indicators, trade associations and the firm’s accountants are good sources to help identify business drivers. There are some statistics that companies in nearly all industries need to know (see figure 1.0). But different kinds of businesses will want to look at different data sets. For example:

Restaurants: Whether a table holds two or three parties in one evening can have

a big impact on the bottom line, so “table turns” is a unique and critical indicator in the restaurant business. A restaurant’s dashboard report should track table turns, along with food sales and other indicators.

Manufacturers: Margin is important for manufacturers, but utilization of the plant is also a crucial piece of information. This can be tracked through machine- or manhours, and it’s important to know the capacity of the facility.

Professional Services Firms: For law firms, accounting firms and consulting firms of all types, it’s all about billable hours. Tracking the staff and how time is recorded and billed is paramount. The key indicator here is realization — how much is actually billed out of the pool of available hours. A dashboard will alert you to whether you’re billing enough hours, and if you’re not, you have the opportunity to identify low performers and boost billing before it drags down your profits.