As a business owner, you get your financial statements and may even read them. Generally, you don’t pay a lot of attention to them and it is very rare that you make a decision based on the statements. The reason for this is financial statements are not good calls to action. If you want to make better, more timely decisions in your company you need to a dashboard.
What is a dashboard? It is a timely presentation of information that are your calls to action. A dashboard contains KPI’s – key performance indicators. Things like:
- Gross profit percent
- Year over year sales
- Sales per FTE (full time employee).
- Food cost per plate.
- Staff productivity numbers.
Here are the five reasons why a dashboard is a great tool to skillful company management:
- There are a lot of moving parts to your business. You need to know about the things that need your attention – the red flags. A dashboard distills all your financial data into easily read info with an emphasis on those things that are running off course.
- A dashboard is more forward looking as opposed to watching your company through the rear view mirror of your financial statement. Total staff costs is about history and doesn’t tell you much. Revenue per employee tells you a lot (is your company getting labor fat or are you lean and mean?).
- A dashboard presents relationships where financials present a picture independent of those relationships. Rent/SF is an important measure. Rent Expense is somewhat meaningless when trying to manage your company.
- Through a dashboard, you will have access to important relationships. Return on assets, working capital ratio, days outstanding for A/R. Every one of these is important – but you would have to work hard to get these measures from your income statement and balance sheet.
- The dashboard gives you the ability to measure employee productivity. Calls answered or made per hour. Orders shipped per day or orders entered per hour.
As an owner or executive, you do not want to have to chase information down or do the calculations yourself. That is not your highest and best use. The goal is one page of information which keeps your finger on the pulse of your business.