What’s a dashboard and why am I watching it?

To manage effectively and be on target to hit your goals, you have to know your numbers. Revenue numbers, sales targets, expense constraints, COGS, cash flowing in and out of business, sales cycle, lead generation conversion %. Some people do this naturally. They internalize all of these numbers and don’t even make a conscious effort to think about them. But not all of us can do that. Just like the gifted athlete versus the hard-working-never-missed-a-practice athlete, both approaches can be successful and get you to where you want to go. So if you aren’t gifted in numbers, what do you do? Use a dashboard!

The dashboard is a quick, concise set of numbers that are important to your business. Perhaps web site hits are most important, or proposals written/month is key, or cost of raw materials/job is something you need to watch. Every business is somewhat different as your industry, your company age, and your company size drive many of these indicators. The dashboard is the twin sister to the planning (So What’s All This Planning Fuss About?) The companies who grow quickly and profitably are those who plan and measure their results. Dashboards are part of the measuring process.

So why do you watch the dashboard? Just like watching the dashboard in your car, you know when you can speed up or when you must slow down by occasionally glancing at the speedometer. You know when to add more fuel by looking at the fuel gauge. You have lights that come on periodically to tell you it’s time to change the oil. A dashboard helps you keep your car running smoothly. It can do the same for your business. Once you figure out which ‘dials’ and ‘gauges’ (also known as metrics) you need for your business, then you track the numbers against those dials and gauges and see how you are doing.

For example, let’s say you are trying to hit a new sales record. You know that number of phone calls and number of proposals are key indicators to whether you are going to get more business. So track them. Keep an eye on your number of phone calls weekly. If it isn’t tracking to what you need to get that extra business, you know sooner rather than later that you need to take some action. Keep an eye weekly on how many proposals you are writing. If you goal for the month was 20 and 2 weeks in, you have written zero, then you know you better change something. The dashboard is a way to get early indicators of where things are in your business. Early indicators let you take action to make changes so that you can stay on track to hit your sales and other goals.

So, you are thinking, it all sounds good but where do I get these numbers, these indicators, these dials and gauges? How do I figure out which ones to use and how do I keep them up to date? The key is to figure out enough numbers to keep you going and not so many that it’s a chore. You can always add numbers, so even starting with just one(!) number is better than none. Also, the numbers must be meaningful to really be useful. Knowing that your revenue goal for this year is $210,000 isn’t as useful as knowing that you must close 42 jobs with an average price of $5000/job.

Easiest way to do this is to think of your business in four different areas: Marketing, Sales, Operations, and Finance. Marketing activities lead to Sales which lead to Operations (manufacturing, delivering goods and services, performing services) which lead to Financial Activities like collecting cash and paying bills. Ideally you will have at least one key metric for each of these areas.

Start with sales. What sales or revenue target are you trying to hit for the month? If you don’t have a number you are trying to hit, see the Planning blog post (So What’s All This Planning Fuss About?). If you have a target you are trying to hit for the year and don’t have it broken down by month, then divide it by 12 at least. That will get you going. Let’s say your goal for the year was $120,000. Dividing that by 12 gives you $10,000/month. Keep going. Divide that by 4 weeks/month and now you have $2500/week. That is starting to be more real. If your average sale is $1000, then you have to close 2 ½ sales a week. Even more meaningful. So with a revenue goal of $120,000, perhaps the most useful dashboard metric would be # sales closed/week. Think about it. If you closed 3 sales by Thursday, you know you are ahead of the game. If you closed 1 sale by Wednesday, you already know you are behind for this week and possibly even behind for the month. Instant feedback! Easy number to quantify and easy number to measure.

Unless you have a computer system (like a cash register that gives you # sales/day) or some other system, pick a sales metric or metrics that is easy to measure. Things like # sales/week, sales $/week, appointments/jobs booked/week, proposals written/week if you don’t close sales each week, contacts for new clients/contacts for existing clients might work better for those with longer sales cycles. Then just keep track of that metric and compare it against the goal you set. Adjust your activities up or down, like you would with your vehicle speed, to keep the sales pipeline flowing. o Similarly for marketing, operations and finance, pick numbers that are easy to measure and watch them weekly. Then change your actions and behavior to achieve your goals. More to come in future posts on how to pick metrics for areas other than sales. Hope this first part was useful.

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