Many of my clients are entrepreneurs. They love marketing and promoting their business, exceeding client expectations and, of course, making a profit. They started their businesses up to provide great value and enhance the lives of their customers as well as themselves. At the start of their business passion, energy and sheer hard work drove the business.
Whilst a lot of these business owners are indeed fearless when it comes to jumping into the unknown of starting a business, many of them actively avoid confronting their profit and loss statements.
Unfortunately when it comes to running a business either you or someone you appoint must understand and monitor your income and your expenses. One of the best ways to do this is to have these figures converted into visual data such as crafts and charts.
Depending on the type of business you run your KPIs, or key performance indicators, may vary from just a couple to scores of indicators. The majority of businesses would need to at least monitor their revenue, cost of goods (where applicable), gross profit, overheads and net profit.
A KPI Dashboard allows you to really see what is going on in your business. Without it you are blind to opportunities and pending disasters.
It is very effective in most cases to have some of these figures displayed as a percentage of the revenue. Tracking these figures as a line graph can show you trends, either up or down, that cannot be easily detected with tabular data or reports.
The data should be produced on a weekly basis and accumulated up into monthly, and then quarter for comparison to previous years dates. In this way you get a very clear picture of exactly what components of your business are improving or impacting on your bottom line.
New online accounting packages such as QuickBooks online and Xero provide basic graphical displays of figures. If you’re running your business on Excel spreadsheets, then this package offers many ways to display your data other than in tabular form.
You can start developing your dashboard with just five indicators to start with. Over time you will find that you may add several more to the mix. Just having a basic dashboard to steer your business with will put you in front of many of your competitors.
The main thing is to have timely data – and by that I mean reporting produced at least weekly. If you’re waiting for 4 to 8 weeks for your bookkeeper or accountant to produce P&L statements for the previous period, your decisions and reaction time are delayed by that duration.
You are basically steering your business by looking in the rear vision mirror so to speak! Not good!
If you realise that you haven’t got adequate reporting and tracking systems in place, talk to your bookkeeper or accountant about having some reports set up and produced on a regular basis for you.
Brian helps small business owners win back their time, passion and performance utilizing a proven step by step blueprint for success. A coach and consultant for over 10 years specializing in business growth strategies.