How far would you get into a road trip without your speedometer, gas gauge, map, or GPS? Likely not very far. So why are you still running your small business without a financial dashboard? I am not the first person to equate the financial dashboard to the dashboard of a car, but it is a surprisingly useful metaphor. The ability to leverage tools and metrics to enhance performance and decision-making is crucial for any business.
Your financial dashboard is a graphic page of your business’s key performance indicators (KPIs). It tells you how your business is performing in real-time. Businesses of every size are transitioning toward financial dashboards so they can get a bitesized update of their business on a timely basis. This provides a better sense of their financial data, allowing business owners to confidently assess when to expand or scale back operations based on real-time insights and comparisons with actual results.
Small business owners often think that financial dashboards are too much to invest in or take too much time to create. The reality is that small businesses need financial dashboards as much if not more than large businesses. When you are a small business, the line between success and failure is thin. You need to do everything you can to make sure your business is on the right side of that line.
In this article, I will discuss why a dashboard and scorecard are essential for small business owners and entrepreneurs. Getting a report on the financial health of your business will help you track cash flow, expenses, debt, and more.
Introduction to Financial Dashboards
A financial dashboard is a powerful tool for small business owners to track and analyze their company’s financial performance in real-time. It provides a centralized location for all financial data, including cash flow, revenue, and expenses, allowing business owners to make informed decisions about their marketing efforts and sales strategies. By using a financial dashboard, small business owners can gain a better understanding of their business’s financial health and identify areas for improvement. This can include monitoring key performance indicators (KPIs) such as gross profit margin, sales performance, and marketing investment, and using data from Google Analytics to inform marketing campaigns. With a financial dashboard, you can see the big picture at a glance and make data-driven decisions that propel your business forward.
Financial Dashboards for Small Business
Many businesses fall into the trap of thinking that because they spend so much time in their business, they know everything they need to about their company’s strategy. Unfortunately, research shows that only 5% of small business owners and employees understand their company’s strategy.
So how can you beat that statistic and make sure that your employees are on the same page with you? Scorecards and dashboards are effective strategic management systems that help you keep track of your business. Beyond this, it is a performance measurement system that tracks workload and a tool that helps your team communicate ideas and needs to achieve your business goals.
Both financial dashboards and financial scorecards are essential components of a small business. The scorecard can focus on work project by project while the financial dashboard gives an overall summary of key performance indicators. Additionally, these tools can connect various digital marketing tools, creating a seamless experience for tracking performance and generating reports.
Financial Dashboards Needs
Now, let’s talk about financial dashboards. If you, like many other small businesses, don’t have a financial dashboard you might be wondering where to start. There are five traits that all good financial dashboards share. You should be able to customize your dashboard designs to fit your brand identity and client preferences. You should look for these traits when you develop your company’s financial dashboard.
Additionally, integrating multiple software tools and platforms as data sources can help compile performance metrics for your business.
Current
The most essential trait of a good dashboard is its timeliness. Your dashboard absolutely must be able to pull data from multiple platforms to use the most current data from your company. Remember, the dashboard is all about getting a snapshot of the company in that specific moment. Using old, out-of-date data can hinder the effectiveness of your dashboard. Further, using stale data could lead you down a path of making the wrong decisions.
Actionable
Your dashboard must highlight KPIs that are easy for you and your team to understand and act upon. Your dashboard is a tool to help you make quick, simple adjustments on the fly. The KPIs you choose for your dashboard should spark questions when you see them and inspire you to dig further into the data and see new patterns. Too often business owners will pick KPIs that are not impactful or don’t give leaders actionable data. When deciding on KPIs, think about how a change in a given metric would impact your actions and focus on the key performance indicators that matter most to your business.
Intuitive
Your dashboard, like the dashboard in your car, needs to be simple to understand. You should aim to check the dashboard as frequently as possible, spending as little time as possible with each check. Therefore, it needs to have simple graphics and metrics that are intuitive. When it comes to analyzing these graphics and determining which dashboard will be best for your company, think about building a dashboard that says as much as possible with as little text as possible. Utilizing drag and drop functionality can further simplify the customization process, allowing for quick and effortless integration of pre-built business metrics.
Custom
No two businesses are exactly alike, and so no two businesses’ dashboards should be the same. If you are using an outsourced CFO, find one that will help you customize a business dashboard to fit your company’s specific brand identity and client preferences. Remember, all companies have slightly different combinations of KPIs that are meaningful to their staff. Figure out which KPIs are best for your company.
Data-Based
Performance data is crucial for providing tools and dashboards that help businesses analyze and visualize their financial and operational metrics. Of course, your dashboard information should be based on data, but beyond that, it should be using the data well. Great business dashboards are able to create graphics with the most recent data and require very little prompting for updates. If you find that your dashboard is lagging, you should rethink it to make sure that you are making your decisions based on the most recent data available.
Financial Dashboards – Examples
Key Performance Indicators (KPIs)
Key performance indicators (KPIs) are essential metrics that small business owners use to measure the success of their marketing campaigns and sales strategies. KPIs can include metrics such as conversion rates, lead generation, and customer satisfaction, and can be used to track the effectiveness of marketing channels and sales processes. By monitoring KPIs, small business owners can identify areas for improvement and make data-driven decisions about their marketing efforts and sales strategies. This can include using dashboard templates to track KPIs and create actionable insights, and using data from accounting data and other business tools to inform business decisions. By focusing on the right KPIs, you can ensure that your business is on the right track and make adjustments as needed to achieve your goals.
Integrating Google Analytics
Google Analytics is a powerful tool for small business owners to track and analyze their website traffic and online marketing efforts. By integrating Google Analytics with a financial dashboard, small business owners can gain a better understanding of how their marketing campaigns are driving sales and revenue. This can include tracking metrics such as conversion rates, average order value, and customer acquisition cost, and using data to inform marketing strategies and optimize sales processes. By using Google Analytics, small business owners can create a more comprehensive picture of their business’s performance and make data-driven decisions about their marketing efforts. This integration allows you to see how your online presence impacts your bottom line and helps you optimize your marketing strategies for better results. Here’s more on accounting and marketing.
Small Business Benefits
There are lots of myths around financial scorecards and dashboards in the small business world. Lots of small business owners think of these financial tools as frivolous and not necessary for running a small business. However, aggregating essential metrics and relevant business data in one centralized location offers many specific benefits that small businesses can get from using financial scorecards and dashboards to keep track of their business’s KPIs.
Dashboards provide a visual representation of key performance indicators, making it easier for business owners to understand their financial health at a glance. This setup enables users to efficiently assess marketing performance and make data-driven adjustments. Additionally, it is crucial for users to remain actively engaged with the dashboards to ensure they are making informed decisions based on real-time data.
Quick Growth
Business owners who use financial scorecards and dashboards are able to adapt their business quickly. These tools also accelerate growth because they help companies see clearly when certain investments are not working by providing real-time insights into key financial metrics, essential for assessing a business’s financial health.
Taking Advantage of Opportunities
Small businesses also love financial scorecards and dashboards because they are a great way to see when a business or team has met a significant goal. All great business strategy is centered upon goals and initiatives. Using a dashboard, a company can quickly track their progress, including key performance indicators like conversion rate, and readjust or pivot when needed.
Giving the Right Guidance
Team leaders have access to a continuous flow of information about their team’s accomplishments and shortfalls. The team leaders are able to give small bits of specific guidance to their team rather than waiting for a big mistake to give all of the guidance at once. By monitoring key performance indicators (KPIs) that measure the efficiency of leads moving through the sales pipeline, they can identify bottlenecks in the sales process and provide timely feedback. Most employees prefer to have a little feedback frequently, sprinkled into the conversation, rather than one large meeting with significant feedback that you want to give for the quarter.
Organizing the Most Relevant Information
It’s surprising how much time you can waste when you are sorting through folders of spreadsheets to determine one important metric. With a small business dashboard, you can visualize and analyze business metrics from various marketing platforms, having all of the information you need in one place. Further, you have a designed system to gather data quickly so that you can update your KPIs.
Facilitating Team Participation in Strategizing
If two heads are better than one, then having all of your team’s heads on strategy is best. Utilizing a KPI dashboard to track specific categories of key performance indicators, such as financial metrics, customer service performance, e-commerce success, marketing effectiveness, and sales performance, allows your whole team to see how the company is performing. This way, everyone has more chances to contribute their ideas.
Monitor Workloads
Observing your team in real-time helps you see where team members are struggling to keep up with their workload. Tracking key performance indicators, such as product sales, can help you determine when you need to hire extra help before you are in dire straits and your team is swamped with work.
Small Business Financial Dashboard Considerations
Dashboards typically are divided up by functional areas of the business, often using specific pre-made dashboard layouts or templates. While every business is unique, they all typically have the same three functional areas: finance, sales/marketing, and operations. A financial dashboard should reflect metrics around each of these functional areas, benchmarking financial performance against industry standards to ensure informed business decisions.
Sales and marketing metrics
Using our car metaphor, sales and marketing is the gas you put in your car. You need sales to make your business go. Your dashboard needs to have a set of metrics that represent the work that your sales and marketing team is doing to find new prospects and turn those prospects into customers. Tracking and analyzing data specific to each marketing channel is crucial to evaluate effectiveness and optimize strategies. Here are some examples of metrics:
- Close Ratio
- Return on Marketing Dollar Spent
- Prospects in Funnel
- Leads
- Return on Ad Spend (ROAS)
- Customer Acquisition Cost (CAC)
Additionally, tracking marketing performance through a well-structured analytics dashboard that consolidates key performance indicators across various channels ensures you can grasp the overall effectiveness of your marketing strategies.
Operations metrics
Operations are how you service your customers. Some companies perform a service. Other companies manufacture a product. For all businesses, operations typically include some sort of labor or employee management. Utilizing performance data through tools and dashboards helps businesses analyze and visualize their financial and operational metrics effectively. Here are some examples of metrics:
- Utilization
- Widgets produced over a period of time
- Waste
- Labor or materials as a percentage of revenue
- Downtime
- Customer satisfaction
Creating a marketing report can also be beneficial for tracking performance metrics and analytics related to marketing campaigns.
Finance metrics
There are tons of metrics around the financial statements that can gauge the health of your organization. The key is to pick ones that actually are material for your organization. For instance, for a service organization that doesn’t require many assets, a metric such as return on assets would not tell much about the company.
For all businesses, I do recommend cash flow metrics. More businesses close because they run out of cash than for any other reason. This is why I typically always include days outstanding in payables, receivables, and inventory (which combined equal cash gap) for every company. Tracking the total amount of open invoices and the total amount of revenue generated from sales can also provide valuable insights. Other examples of metrics include:
- Return on investment
- Sales by channel
- Current or quick ratio
- Gross margin
Additionally, monitoring the total number of clicks on Google Ads, the total number of website visits in Google Analytics, and the total number of customers can help assess business performance.
Ecommerce and Sales Metrics
Ecommerce and sales metrics are essential for small business owners to track and analyze their online sales performance. This can include metrics such as sales revenue, conversion rates, and average order value, as well as metrics such as customer satisfaction and retention. By tracking these metrics, small business owners can identify areas for improvement and optimize their sales strategies to drive more revenue and growth. This can include using dashboard templates to track ecommerce and sales metrics, and using data from Google Analytics and other business tools to inform marketing campaigns and sales strategies. By keeping a close eye on these metrics, you can ensure that your ecommerce operations are running smoothly and make data-driven decisions to boost your sales performance.
Customer Service and Satisfaction
Customer service and satisfaction are critical components of any successful business, and small business owners must prioritize these metrics to drive growth and revenue. This can include tracking metrics such as customer satisfaction, retention, and churn, as well as metrics such as response time and resolution rate. By monitoring these metrics, small business owners can identify areas for improvement and optimize their customer service strategies to drive more satisfaction and loyalty. This can include using dashboard templates to track customer service metrics, and using data from customer feedback and other business tools to inform customer service strategies and improve overall business performance. By focusing on customer satisfaction, you can build a loyal customer base that supports your business’s long-term success.
How to develop a financial dashboard
You have a scorecard, but you’re not sure if it is the best reflection of what your business is achieving. Are there ways that you can change your business scorecard to make it a better reflection of your business? A small business dashboard can help you visualize and analyze business metrics from various marketing platforms, making it easier to understand your performance. Utilizing small business dashboard templates can simplify the process of creating marketing reports and tracking key performance indicators (KPIs).
Shift Your Mindset
When you are developing your financial scorecard, you always want to lead with your goals. Make sure that your goals are prominently displayed on the scorecard. Utilize a KPI dashboard to track specific categories of key performance indicators. Think about ways to promote your team to have a better mindset. Create weekly mindset checks where you focus on the drivers that are actually pushing your success. If you can spot patterns and problems early and proactively push the needle on your goals, months will take care of themselves. Tracking key financial metrics is essential for assessing your business’s financial health and making informed decisions.
Understand the Difference Between Lagging and Leading Indicators
Lagging indicators can be an issue because of their reliance on the present moment. Utilizing performance data through tools and dashboards can help businesses analyze and visualize their financial and operational metrics more effectively. Don’t put too much focus on lagging indicators because they will not be an accurate image of how your company is doing now. Leading indicators are what you should use to help guide your business in the present moment and seize the day. Additionally, creating a marketing report can be invaluable for tracking performance metrics and analytics related to marketing campaigns.
Other Articles
Did you enjoy this article? Here are some others to check out.
- 4 Metrics Any Business Owner Should Review Monthly
- The Essential KPIs Your Small Business Should be Tracking
- Big Ideas for Small Businesses: 4 Examples of KPIs Your Business Should Be Tracking
Conclusion
Getting a financial scorecard and financial dashboard for your small business might seem like a small step or even a frivolous investment but they can make a huge difference. Properly tracking performance in your small business will allow you to address problems before they become significant and even make staffing decisions before the situation becomes dire.
If all of this seems daunting to you, you’re not alone. Many small businesses feel overwhelmed by financial reporting decisions. That is why Krieger Analytics exists. We offer virtual, short-term CFO services to our clients so that they have support while they make big financial decisions for their companies. Many small businesses just need a little boost to get on the right financial footing, and that’s what we’re here for.
Don’t wait, contact us now!
