Often business owners and directors are so overwhelmed and distracted with day-to-day tasks that key business decisions are made on ‘GUT’ instinct. Sure, there’s a place for intuition in business, but in my dictionary GUT stands for ‘Given Up Thinking’.
Why do you need a dashboard for your business?
As a business owner or director you’ll be acutely aware of the potentially big consequences that arise from the business decisions that you make. Creating a dashboard for your business will help you and your team make quick, timely and informed decisions.
Just like in a car, your dashboard gives you a quick overview of the key performance indicators (KPIs) in your business. KPIs are the numbers that will tell you how your business is performing. And just like the dashboard in your car, your business’s KPI dashboard measures only your critical, high-level indicators. You’re not looking to hoist up your car, take the wheels off and check everything underneath to see exactly what’s going on. Your KPIs will tell you what needs further and more detailed investigation.
With the right KPIs, what you measure now will give you insight into the future of your business by allowing you to predict outcomes. Predicting your business outcomes in advance gives you the ability to prevent a car crash from happening in the future.
Driving your business forward
The goals you have in your business are like the destination you programme into the sat nav in your car. Your fuel gauge is like your business’s cashflow. Do you have enough to reach your destination or will you need to stop off to top up?
Your speedometer tells you how fast you’re going. A measure of speed in your business might be how much you’re making in sales, or the rate of growth of sales. Are your sales too slow to make a profit at the end of each month? Is one of your competitors about to overtake you and steal your market share?
Or are you growing so fast that you’re unable to deliver your product or service to customers in full, on time and in spec?
Less is More
When creating your KPI dashboard, you’ll want to chose just a few critical numbers to track how you’re performing against your business goals and enable you to prevent any future car crashes. That means you’ll want to spend some time defining what a car crash would specifically mean in your business.
If the only tool you have is a hammer, you tend to see every problem as a nail. Abraham Maslow
Your KPI dashboard will most likely evolve overtime. So in the first instance keep it simple, and when you do add additional measures don’t go overboard. Remember you’re after your KEY performance indicators.
Many businesses start by measuring KPIs monthly. That’s a great habit to build. Because a month is a long time in business, ultimately you’ll want to measure your KPIs weekly.
Your KPI dashboard gives you a bird’s eye overview of what is critically important to the future of your business. Of course, a bit like driving your car, if you choose not to look at your dashboard you’re still in danger of running out of fuel (cash) or getting a speeding ticket (customer complaint).
Engaging your team
Your KPI dashboard is one of the most powerful tools in your business. Once you’re in the habit of measuring and reviewing your KPIs with your fellow directors, your next step is to use it to change the culture within your business.
Your KPI dashboard will become a highly effectively communication tool for team meetings. Instead of most of the meeting being spent on giving status updates, your team can use the time to focus on solutions to risks and issues that arise from looking at your dashboard.
You’ll have heard, ‘What gets measured gets done”. The profitability of your business depends on how well your team consistently perform critical activities. Small changes in critical areas can have a big impact on your bottom line.
Your team will perform best when they understand how their performance affects the bottom line, and how their own performance is measured.
Catch your team doing something right
What gets measured gets done, and what gets rewarded gets done again. An easy, yet often overlooked, way to reward your team for a job well done is simply to thank them. When was the last time you caught individuals in your team doing something right?