When we speak to potential clients – mainly coaches, executive coaches or consultants – we always ask what metrics they find most important to watch in their business.
It’s surprising how often I hear… “I just look at my business bank account”
What’s interesting (and unfortunate) about this is that your bank balance can really only tell you one thing: how much cash you have in the bank.
What about all the other information you need to really know how your business is performing?
If you don’t, then suffice to say you need one of the most important tools for a growing business: a business dashboard.
Your bank balance is still important. But a business dashboard, set up with the right metrics and key performance indicators, will reveal a more telling tale about where your business is going.
Whenever we bring up the concept of a dashboard to new clients, we’re often met with the classic ‘deer-in-headlights-look’.
Yes, it can be intimidating, overwhelming or maybe downright boring for you – but let me remind you that it’s your business, your money and if you don’t have any idea where your business is headed, you are driving blind.
If rows and rows of numbers overwhelm you (and your brain automatically switches off), there’s a quick hack around this: Start with a simple one-page graphical display of your most important business metrics.
Don’t know what these metrics are? Here are a few simple guidelines you might want to consider when pulling these together.
Think about your business dashboard like the dashboard in your car. If you’re only watching your bank balance, that’s like just watching the Fuel Gauge whilst completely ignoring the other indicators – speedometer, heat gauge etc…
So you have no idea how fast you’re going or whether the temperature is ok.
Maybe you’re not in immediate danger but if you’re not paying attention to the temperature gauge over a period of time, it’s likely to mean a more serious problem for your car if you’re missing some of the early warning signals!
This is why a good business dashboard is so important for a growing business. It will help you keep an eye on several key areas of your business at once so you can focus on steering your business in the direction you want it to go!
Some other reasons why a business dashboard will help you (and your business) thrive…
In my previous career as an investment banker, it was abundantly clear that the businesses (we financed) that kept a regular check in with their numbers were up to 55% more likely to hit their business projections, growing their business on cue and almost 20% of those far exceeded their original growth targets.
If you think that business dashboards are only for big companies, think again. I was speaking to one of our newer clients who runs a couple of fitness studios and bootcamps and he was tearing his hair out at why his bank balance had suddenly plummeted.
Plenty of new people in the gym. He was run off his feet with his staff having to work more than usual.
So he was simply baffled to find that his bank balance was dropping!
He surmised that he was paying too much for his new marketing campaign, so wanted put a halt to that straight away?
What do you think? Right decision?
Again, simply using this one-dimensional indicator such as cash in the bank is not sufficient to get a good idea of what is actually going wrong in your business.
I get it that the day-to-day rush of running your business consumes almost all of your time.
But truth is, it can take as little as 10 minutes once a week or 20 minutes once a month to check in and review your business dashboard AND put a few course corrections in place.
If my client had a simple dashboard in place he would have noticed that it wasn’t new client revenue that had dropped, in fact there were several other things going on…
(1) his monthly recurring revenue from ongoing bootcamp sessions were dropping and that clients were cancelling, defaulting or deferring payments – against the terms of their contract.
(2) AND he was busy with new sign ups (which were often unpaid trial sessions) so he was incurring more expenses – marketing and staff time – to acquire these new leads and sales.
A double whammy for cash, but not if he continues with his marketing strategy and AT THE SAME TIME, started looking into why his existing clients were dropping off in order to put a stop to it.
Do you know what you want from your business? Exactly?
Can you articulate precisely what has to happen for you to have no doubt that your business is a success?
How do you define what success looks like?
Growing a business is about knowing where you want to go – setting a target (your forecasts) and then progressing towards it, tracking your progress as you go (your real time performance).
This immediately gives you the bearings you need to decide whether you’re going in the right direction.
I can safely assume that none of my clients got into business because they loved spreadsheets and financial reports (unlike me! )
That’s totally understandable. And as it turns out, all of those spreadsheets and financial reports are far easier to ‘read’ as charts and graphs.
Here’s an example…
Both of the these images show the same set of numbers. Imagine for a moment, that these are from your business – your business expenses.
Which do you prefer?
This one…
Or this one?
I love graphs and charts.
It’s confirmation of what I already see as the patterns and trends that jump out from the numbers. But that’s only because I lived and breathed this for more than 20 years now including a rather intensive 15+ years in investment banking.
You can easily discern trends, differences and patterns otherwise hidden in rows and rows of numbers.
Can you see how this visual chart might be more useful for you to get a quick snapshot of where you are headed in your business?
You might even be able to ask the right questions.
Get the right actions in place.
Make strategic, timely decisions before a crisis occurs.
A simple graphical representation of key business metrics will be able to show you when your business isn’t meeting its forecast goals.
There’s always a story…
Here’s an example—again, let’s say this is part of your business dashboard. It’s showing actual revenue compared to your forecast over a six-month period:
Immediately, you can see that over the past few months, actual revenue hasn’t been meeting your forecast.
What questions might come up for you?
Is it seasonal? – No, we didn’t dip this time last year.
When did this start? – So you start looking into the detail…
What’s changed with sales?
How’s the marketing doing?
Did we turn off paid ads?
New competitor around?
Reorders? Upsells? How are those tracking?
If you’re regularly reviewing your dashboard, you’ll be able to nip any issue in the bud before it turns into a real crisis.
Conversely, if you’re doing well, and beating your forecasts, then there’s probably something that’s working well for you too and it’s time to learn from that – your latest marketing campaign perhaps – and adjust your forecasts to do even better and seize the opportunity whenever you can.
The sad reality is that not enough business owners review their business performance on a regular basis.
Most do not have a dashboard.
And rely on their accountant to meet with them once a year to file their tax returns without any useful / value-added input.
When you use a dashboard regularly you’ll be able to utilise your advisors far more effectively – like your accountant / book keeper and other business support to help propel your business forward.
You don’t need to do this alone.
But there’s a big difference between delegation and abdication.
As the business owner you need to be in the drivers’ seat.
Someone else might be responsible for getting the job done, say your accountant or book keeper. But the buck stops with you. If there’s a mistake in your tax returns, it’s still your business and you’re ultimately responsible.
Strike up a discussion about the trends you’ve noticed.
Ask questions if you are unsure. Without finger pointing or blaming. Recognise that it’s all information and feedback that will enable you to course correct or optimise.
Put your advisors on notice that you have big dreams – let them know exactly where you’re headed. Be specific about the numbers you want.
Not only will this get them on board with your vision, it will also enable you to revise your strategy on a regular basis.
Otherwise your team won’t know how best to support you.
All of us have the same 24 hour day.
And if you feel like you are continually wrangling your to-do list, it is more than likely you are struggling with what to prioritise in your business.
Tracking your business performance regularly will actually save you time.
Instead of reacting when things have reached crisis point, you’ll be keeping a close eye on all the key metrics that matter – that will give you the early warning indicator you need to make the necessary changes to avert disaster.
You’ll also be able to focus on exactly what you need to do to, and effectively only do those things that will move the needle in your business.
I’m not saying that there will never be chaos, tension or any unexpected mishaps, but just like it can be rough driving sometimes, say in a heavy downpour, you need to make sure you’ve got a clear view through the windscreens, eyes on the road, a firm hand on the steering wheel and have all your wits about you.
Without a financial dashboard, it’s like driving in that downpour without the windshield wipers on and leaving it to chance where your car goes. You’d never do that!
But unfortunately business owners do it every single day without a financial dashboard for their business.
Start NOW!
Don’t put off getting your business dashboard because it’s overwhelming.
Pick a small set of the most important metrics and start tracking those. Which ones? See this guide here
Don’t worry about getting it perfect before you are able to get started.
Simply notice how being able to have a visual representation of those metrics in real time affects your business and how you respond.
Build that habit. Like building muscle strength and fitness – it boils down to repetition and increasing intensity.
Once you’ve gotten into a rhythm and routine of reviewing a few simple metrics, add a few more – I guarantee you’ll know which ones as you dive into uncovering the stories behind the metrics.
It’s really about keeping the review process quick and simple – that’s what the business dashboard does.
Then you can spend the time developing appropriate strategies and tactics required to pivot your business and really grow.
Let’s go!
If business growth is a priority for you right now, register for one of the limited business accelerator breakthrough sessions here. Specifically for coaches, consultants and experts in their field, who want more income, more impact, and more profits!
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