When we drive we take it for granted that our car dashboard is set up to tell us most of the important things we need to know to have a safe trip and arrive at our planned destination. When you look down at your car’s dashboard you can quickly determine how the vehicle is functioning and receive alerts when something is not working properly. You would likely be able to get to work or to the mall if your dashboard wasn’t working, but imagine how much more difficult and uncomfortable it would be. My first car had a broken gas gauge and as diligently as I attempted to ensure that I had enough fuel to get around, more than once I wound up stranded on the road (and that was before the advent of cell phones).
I think we all agree that driving with a useful dashboard just makes sense. If it makes so much sense to drive with a dashboard, then doesn’t it also make sense to drive your business with a “financial dashboard” that gives you concise and timely information about your business? Don’t get me wrong, a financial dashboard does not replace a good set of financial statements and other detailed reports. However, a properly designed financial dashboard will summarize this data into Key Performance Indicators (KPIs). Dashboards are essentially snapshots comprised of charts and tables of your company’s KPIs such as sales reports (daily, monthly, year-to-date), cash on hand, operating cash flow, profitability, profit margin, back orders, inventory levels, days sales outstanding, etc.
Often times when I look at a company’s financial reports, what I find is that income statements run on for two or three pages listing nearly every account in the general ledger. Balance sheets and cash flow statements are also generally not well designed. As a result, business owners are frustrated that they get too much data and not enough information. Think about the KPIs that are vital for your business. Next, have your staff develop a financial dashboard that includes all of these KPIs so that you can quickly see how your business is performing and where you need to focus your attention to help grow your company and improve profitability.