How to Build a Business Dashboard

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I’m an impatient person.

I want to know what’s going on with my business without having to wait for other people to pull reports, summarize data, update spreadsheets, and build presentations.

And, frankly, all that activity wastes a ton of time. Yes, it’s critical to know what’s going on in my business, but the number of hours that can get sunk into reporting can be depressing to think about, especially if you put a dollar figure against that effort. It turns out that reporting can be really expensive! That time and money could have spent growing the business.

This is why dashboards, particularly automated financial dashboards, are so important to me and my business.

Good financial dashboards save time, save money, and display information in a way that brings the most important data to the surface.

Today, I’m going to talk about the eight reasons why you need a financial dashboard for your business and give you some tips to get started.

Screen Shot 2015-12-01 at 3.49.52 PM

Screenshot from within our LivePlan software.

Why financial dashboards matter:

A great financial dashboard presents your most important financial metrics in an easy-to-read, visual format.

It brings the most important data to the forefront and makes sense of the numbers that power your business.

But, beyond just a pretty presentation, there are several important reasons why your business should have a financial dashboard:

1. You’ll develop good habits

First of all, knowing how your business is doing is critical to your success. That may seem insanely obvious, but I’m always shocked by the number of businesses that don’t spend much (if any) time looking at their financial metrics. Too many businesses just look at the balance in their bank account and assume everything is fine.

Instead, to build your business into a success, you need to start with creating the habit of tracking your financial performance. Just like keeping a good diet and exercising regularly, once you start the habit, it’s easy get addicted.

A good financial dashboard presents your key business numbers in a way that makes sense, and makes it easy to review the data. Instead of wading through pages of spreadsheets to find what’s important, a good dashboard brings your key numbers to the forefront and makes them easy to understand. That makes your performance easy to review, which will make creating the habit painless.

The more you’re in the habit of reviewing your numbers, the better you’ll know your business and what it takes to grow it. More importantly, if things aren’t going so well, you’ll see problems coming from a long way off and be able to steer around them.

2. Graphs and visuals tell a story

I don’t know about you, but I didn’t get into business because of my love for spreadsheets and financial reports. And I know I’m not alone. Most people, in fact, prefer visual presentation of data to wading through a sea of numbers.

Good financial dashboards are all about presenting key business numbers in a visual way. This not only makes the numbers easier to understand, but it helps put numbers in context. Charts and graphs make it easier to compare your performance to last year, or compare the relative size of your various revenue streams.

In short, the charts and graphs on a financial dashboard tell a story about your business. They instantly show relative differences and trends that a simple spreadsheet just can’t show. They help you see the direction you are headed and encourage you to ask questions.

3. You’ll be encouraged to tell the story behind the numbers

Your dashboard should show how your business is doing compared to the same time last year and compared to your goals. Are you doing better than last year? Are you beating your forecast and keeping to your budget?

Because visual presentations encourage you to ask questions, you’ll be likely to explore why things are going better or worse than your plan—there’s a story to be told there.

And, exploring why things are different is critical to understanding your business and how you can grow. If you’re beating your plan and doing better than the same time last year, maybe there are lessons to be learned from your latest marketing campaigns. If you’re not doing quite as well as planned, why? What could you do differently going forward?

4. It’s a learning opportunity

Unfortunately, too many people hate the process of reviewing their numbers because it seems like getting a grade in school.

Instead, think of it as a learning opportunity. What did you do that worked? What didn’t work? What should you change?

The key is to start asking questions about the numbers. What did we think would happen? What actually happened? Why is there a difference? At the end of the day, it’s a learning opportunity—an opportunity to grow your business better. It’s not a grade. It’s about finding out what works and what doesn’t work as you try and grow your business.

5. Stand out from most entrepreneurs

The sad reality is that not enough entrepreneurs review their key business numbers, let alone have a financial dashboard. Putting together a solid dashboard is your opportunity to stand out from the crowd, especially with advisors, investors, board members—even your executive team. Instead of just providing the same old financial reports from your accounting system, provide a visual dashboard that will spark conversation and discussion about how to improve your business.

6. Get out ahead of your board of directors or investors

Your board of directors and investors are going to ask for monthly reports. Putting together a dashboard ahead of time, before you are asked for the data, will set your company apart from the crowd. Not only that, but the visual presentation of your data will be easier for everyone to understand and encourage richer, more valuable discussions about the data.

If you build your dashboard with an online tool, your board and investors will be able to check in on your performance whenever they want. Instead of having to compile reports and send them off, investors and business partners can just log in and check on the latest data. Investors will be really impressed.

7. Get everyone on the same page to define success

Your financial dashboard should do more than just present your numbers—it should also show what you planned to accomplish. After all, financial data without context doesn’t really tell you much. Did you accomplish what you’d hoped to? Without defining what success means, it’s hard to know.

Building a dashboard is a great time to review your business goals with your team and get everyone on the same page. Use your dashboard as a reason to develop your forecast and define your business goals so you can guide and grow your business better.

8. Save time

As I mentioned at the beginning of this article, reporting can take a ton of time. If it requires a lot of effort, there’s a good chance it won’t even get done.

But, if you can automate your financial dashboard so that data is automatically collected from your accounting system, you’ll save countless hours every month and get the data you need at your fingertips, just when you need it. If you’re going to build or buy a dashboard, make sure it’s as automated as possible.

How to get started building your own financial dashboard:

Building a financial dashboard may seem like a daunting process, but it doesn’t have to be. Here are a few tips to get you started, whether you use Excel to build your dashboard, or an online dashboard tool, like LivePlan.

1. Identify what matters

When you’re setting up your financial dashboard for your business, the first step is to choose a set of KPIs that you want to monitor. Every business should track cash, revenue, expenses, and profits. Beyond that, you should choose 12 to 15 additional metrics that are important to your business. Some of these metrics will be reviewed on a daily basis, some on a weekly basis, but all of them should be tracked on a monthly basis.

2. Set targets

Once you know what you want to track, set goals for each metric. Perhaps you have a fixed target every month or you might set different targets for different months. Perhaps you plan to grow sales every month, so you’ll want to set a forecast for that.

This is a great opportunity to get your team all on the same page. It can be a great exercise to work on your targets together so that everyone has full buy-in into the goals and how you arrived at them.

3. Start simple

Don’t put off launching your dashboard because it’s not as detailed as you want or tracks all of the metrics you want. Instead, start simple with a pilot program. Pick the most important metrics and track just those. Once you have your dashboard working the way you want it to, you can expand what you track and how you track it.

4. Make sure you can maintain it

A dashboard is no use if it’s not up to date. If you can’t keep it updated easily, then you’ll likely abandon it. If possible, automate the process of updating your dashboard. Choose a solution (like the LivePlan Scoreboard) that automatically collects your data from your accounting software and automatically creates all of your reports.

5. Present the most important metrics only

It’s tempting to try and include every last metric about your business in your dashboard. This can lead to information overload and make your dashboard cumbersome to use. Instead, be disciplined about keeping your dashboard simple. Focus on the key numbers that are important to your business and leave off the rest.

Here’s a good rule for deciding to include a number on your dashboard: if you won’t make a business decision based on what the number is, then leave the number off the dashboard.

Build it before someone asks you for it

If you’re working with outside investors or a board of directors in your business, they’re going to ask you for your numbers. Instead of waiting for this to happen, build your dashboard early. After all, you should be running your business with a dashboard even if investors don’t ask for one. It’s simply an easier and more efficient method for reviewing your business data.

Dashboards are an invaluable tool, not just for financial data, but for marketing and sales data, product development progress, product usage stats, and more. Check back soon—I’ll be diving into those different types of dashboards and what you should include on them.



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