Wednesday, August 10, 2011

Using a Dashboard to Monitor Your Business

I consider the development and use of a dashboard as a best practice because it really helps you to keep your finger on the pulse of your business. Many small businesses don’t check in on their operation often. Granted, if you’re checking your financials and marketing results at least quarterly, that’s a big improvement over doing an annual checkup. A better practice is to monitor it monthly however, and there are some elements of your business that you may want to monitor weekly. After watching the changes from month to month, or week to week, take a step back at the six month mark and look strategically and objectively at what all the monthly incremental changes might mean.

What’s a dashboard? Dashboards are used by many large businesses to monitor their business throughout the year. Dashboards strive for simplicity of presentation of data related to your Key Performance Indicators, or KPI. Key Performance Indicators include areas such as: Marketing, Sales, Financials, and Operations. The data is often presented as trend lines, charts, and other visuals. This is how they came to be known as dashboards – when driving your car your dashboard provides at-a-glance insight into critical areas of the car’s operation. And so it is with your business dashboard also. Some of the dashboard software that’s available even prepares the data to look like gauges that look like they would be found on your car’s dashboard. These gauges can be superfluous, as long as you have the trend lines. Recognizing trends improves your ability to strategize and your decision-making as you grow your business. You’ll also notice areas requiring more attention. This timely recognition allows you to consider an intervention when an issue is small and easier to resolve.

What are key areas to include in your dashboard? I’ve already identified several possible categories to include, and this can be variable depending on the nature of your business. If you are a solopreneur, you might not need to use the Operations/HR category, for example. It can be helpful to work with a business advisor or consultant to develop your dashboard as these professionals provide objectivity and other perspectives that can be hard for a business owner to achieve. Within each category you will choose the elements that you feel are important to monitor. Take some time to look at your business strategically. This is how you will determine what the key categories are. From there you’ll drill down into more specific items to monitor. You can see that this means you are evaluating and analyzing your business – a mindset that you want as an active part of your business.

What specific items would you monitor in each category? I’ll make suggestions here, and you are not limited to these. You may have others that have more meaning and greater impact on your business and so those are the ones you should use. Again, this gets back to thinking strategically.

Marketing – What do you use as marketing tools to build your customer base? What do you use as tools to maintain your customer base? Total marketing cost?
Website analytics – search engine rank, number of unique visitors, amount of time visitors spend on your site, blog subscribers
Social media – for each channel that you use you might track friends, likes, followers, connections etc.; you would also want to include a measure of engagement such as post feedback, tweets, comments etc.; you might include a measure of the time you spend interacting on social media; advertising using social media channels (Facebook ads for example)
Print advertising – dollars spent; contacts from print advertising
Newsletter – number of subscribers; number of unsubscribes

Sales – Where is your income coming from? What offerings are strong and which are weak? Is your sales funnel effective?
Prospects, Conversions, Retention – how many calls, emails and other requests for information about your business have you had; out of those, how many have become customers; and out of those how many have stayed for a specified timeframe? The specified timeframe comes from your determination of how long means that they are a loyal customer
Products, Services

Financials – You may be monitoring these regularly through your accounting software.
Income, Expense, Profit/Loss, Long-term debt, Short-term debt, Assets, Net worth, Ratios

Operations – Is your business operating efficiently?
Facilities – Is your business space being used to its maximum
Human Resources – Number of employees, employee hours, employee cost

By taking a look at these categories and suggested elements, you can see the value of having all this information in one place. These are elements that we know we should monitor, and probably even know where to collect some of it. Through developing your dashboard you will learn exactly where to collect it all and now will have it in one location. You will be able to see the inter-related issues more quickly and may come to additional possible actions to take as a result.

How do I build my dashboard? You can build your dashboard by using Excel, and there are also software dashboards available. Many of these are for large corporate ventures and not as appropriate for micro-enterprise. Mr. Dashboard is one product that provides an easy to use excel interface that transfers itself automatically into charts and graphs that visually display the numbers that you’ve entered. It provides for 25 metrics, though if you are monitoring more than 25 items you can use more than one chart of 25. In this case you can separate categories out from each other. When you’re first starting out you’ll want to get your feet wet with your dashboard before getting highly detailed.

Are you using a dashboard? What do you include on yours? Do you have favorite software for this, and if so, please share with us here.

1 comments:

nancy02paris said...

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