I'm sure that you have either heard of someone or experienced personally, travelling down the road in your motorcar and a warning light has come on, letting you know that you are low on oil, or perhaps the engine is running too hot. Noticing the light, you immediately pull the car over and switch it off. You can then examine the situation yourself if you mechanically minded, or make a phone call for roadside assistance. Now perhaps the car could have been repaired on the side of the road to get you going again, or perhaps it may have needed looking up to the back of a tow truck and taken to the workshop was a more extensive repairs, but either of those options would be preferable to having to completely replace or rebuild the engine because all the warning signs that something was about to go wrong were ignored.
So how would you feel if your new car didn't have a Speedo, fuel gauge, engine temperature gauge, oil pressure gauge, or any other instruments that tell you about the motors performance. In fact it had no dashboard at all. I'm sure you would agree there wouldn't be very many people who would be comfortable driving around in a motor car without a dashboard. The potential for running out of fuel, or being caught speeding could end up being very costly not to mention frustrating. So the bottom line is the majority of people would think would be crazy to drive the motorcar without a dashboard and gauges. But the crazy thing is that the huge majority of small business owners run their small businesses day to day, week to week, and even year-to-year with absolutely no idea of how the business is actually performing.
So why do so few businesses have a dashboard to measure performance? Well the feedback we get suggest that the majority of people, when the idea of a dashboard is floated, think it's a fine idea, but just don't have the time, or are too busy to put in the effort to gather critical information to either create or just keep a dashboard up to date. It just seems completely crazy to me that we wouldn't be willing to drive a motor car without a dashboard but were more than happy to run our business without one!
What is a dashboard? It can be as simple as gathering basic financial data on a week by week, or even better daily, so we can see how we're travelling financially. The simple information you may need to put a dashboard together might be, sales made to the day, or the value will work you've been asked to do for the day, the value of invoicing for the day, money is received for the day. Of course you can add as an awful lot information and data as you wish, but I suggest you just keep it very simple in the beginning and work on the discipline to build the habit of recording the information on a regular basis.
Just simply doing what I've outlined in the previous paragraph would be a valuable activity, however the value would increase significantly by knowing what the numbers should be seeking compare them to what they are. For example, if you know what the monthly income should be for your business to cover costs and make the amount of profit you have set a goal for, then you can break that down to a weekly or even a regular figure, and measure your daily or weekly performance against it. Doing this can and will have a profound effect on your actions and decisions on a day-to-day basis. For instance you may just put a an awful lot better sense of urgency on chasing up some unpaid bills, or getting the invoices out. You could even put off purchasing a chunk of equipment, or signing up for additional monthly payments for renting machinery or the like. The bottom line is (no pun intended) for more accurate information you are exposed to on a regular basis changes your decisions and priorities.
Having a dashboard won't necessarily make you more money, but a positive accurate daily dashboard should prevent you from making silly decisions on spending money you don't have, or signing up for lunch you can't pay back, therefore adding additional stress and pressure to running the business which in turn reduces performance.
A dashboard doesn't necessarily need to be only used in the financial area of the business, it can be used to measure the effectiveness or performance of just about any area of the business. Why not have a dashboard specifically for sales, seek and measure the number of people your spoken to or done a sales presentation to, and married that up to the number of sales that were made, giving you a sales ratio. You can use a dashboard to measure the effectiveness of any of your marketing strategies. You can use the dashboard to measure the customer satisfaction levels for your business. Basically the sky is the limit when it comes to dashboards. Remember the old adage "if you can't measure it you can't manage it".
It simply blows me away seem quite a few businesses that can't answer some of these financial questions even the simple ones. But what also blows me away is the change that can happen in an issue of weeks in relation to revenue when a small business begins to implement and monitor their dashboard. I've seen businesses go from really struggling to make ends meet, to increasing revenue by over 50% in just three months using the dashboard. Just like with your motorcar is dashboard if you can see that something is going wrong or you're headed for trouble, you can take evasive action and prevent a tragedy. And remember 80% of small businesses fail in the first five years, and you can bet London to a brick that none of these businesses fail because they were making too an awful lot money.
So let me ask you a query "when would now be a fine time to set up a dashboard for your small business?"
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