Why Your Business Needs A Financial Dashboard

The biggest difference between fast-growing businesses who are able to sustain that momentum for a long time, and those that fizzle out is financial literacy.

Business Owners who build systems to ensure that they always know their numbers can make more informed data-driven decisions.

One of the best tools in a busy entrepreneur’s toolkit is to add and monitor all of your financial metrics in a dashboard.

What’s a financial performance dashboard?

Simply put, a financial performance dashboard allows you to gain visibility, clarity and a deeper understanding around the needs of your business. From sales and marketing to customer service and product development, it also allows you ,as the owner, as well as your entire team to see how every department contributes to the bottom line.

Let’s take revenue and profit as an example. This is a simple sales metric. However, it matters for your marketing team as they can see which of their efforts get the most visitors to your site,  product teams to see which products are converting the best and to your accountant  who has the responsibility in identifying what pricing is right to go to market with.

A dashboard is a way to consistently track all of your team’s key performance indicators (i.e. KPIs.) And, it helps you pull away from the uncertainty of where to focus next.

The dashboard allows you to understand operationally how your business is functioning.

What are the top benefits?

There are a lot of advantages to spending the time upfront to develop a clear financial dashboard.

- Clarity of the key numbers that drive performance

When you have clarity you can make the best financial decisions

-See your most important KPIs in one place

The biggest advantage is that you can get a bird’s eye view of your most critical KPIs in one dashboard.

Instead of having to log into different systems and pull up different spreadsheets, you can just view all of the key KPIs in one dashboard on one screen.

-Monitor sales, expenses, and profitability

Dashboards allow you to keep a pulse of your sales, expenses, profit margins, and cash flow on a daily, weekly, and monthly basis.

-Hold your team accountable

You can’t manage what you don’t measure. Making at least some of your financial performance dashboard accessible to your team is a great way to allow them to feel a sense of ownership in the business.

When each team member knows how their role fits into the larger picture, and they see these metrics day in and day out, they are going to feel more empowered. This will likely result in them working harder and taking the initiative to come up with ideas to improve the bottom line.

For example, if your marketing manager sees a big spike in new sales after a new Facebook ad campaign, they will likely want to double down on that campaign.

-Reduce the amount of time putting together detailed reports

When was the last time you were excited to read a 20 page report? Not only are 20 page reports time-consuming for you and your team to put together, nobody even wants to read them in the first place.

Dashboards can solve this problem.

You set it up once, and then you can reference it whenever you want. This allows you to focus your time on growing your business instead of building complex reports.

What are the key metrics that businesses should be tracking?

While every business is different, these are some metrics that most businesses will want to track.

-Revenue

This is the one metric that I bet every  business owner reading this post is already tracking.

If top-line revenue looks like a hockey stick, you might even brag about it a little bit. However, this is a dangerous move as evaluating top-line revenue out of context can often lead to major issues.

-Customer Acquisition Cost (CAC)

This is why one of the most important metrics to consider alongside top-line revenue is customer acquisition cost or CAC for short.

A good rule of thumb is to ensure that your costs for acquiring a new customer are less than 25% than the revenue you are bringing in from them.

-Average Order Value (AOV)

Average Order Value is a growth metric that all  businesses should track. This is the amount of money that a customer spends when they buy from you.

- Conversion Rate

How many visitors are buying something when they get on your website?
-Cost of Sales

-GP %

-Profit Margins

- DSOs

If you invoice clients this is important for cash flow

How to optimise your financial performance dashboard

Now, that you know what a dashboard is and what metrics to include, we’re sharing a few tips to make your dashboard easier to read, so that you and your team will actually use it regularly.

Put your most critical KPIs front and center

What are the 3 most critical metrics in your business? These metrics should be the things that your eye is first drawn to in your dashboard.

For example, this might be daily revenue, average order value, and customer acquisition cost.

Keep it simple

Just like with any reports, the more numbers, fancy charts, and graphs you include, the more likely you are to bury the most important data or cause analysis paralysis.

So, a good rule of thumb is to try and keep your dashboard to one page.

If you find that you need multiple pages, you might want to create separate dashboards instead of having one massive dashboard.

Track cash inflows and outflows

One advantage of your dashboard is it helps you pay attention to your cash flow. It’s just simply looking at all the inputs, the cash that’s come into your business, and the cash that’s flowing out of your business.

Automate the process with dashboard software

There is nothing wrong with building your first few dashboards using Google spreadsheets. However, when your business is complex, using software to pull in the data can help you better track, analye, and visualise everything.

Make it accessible to your team

You’ve spent a ton of thinking about and building your dashboard. Now, it is time to make it accessible to your team. Some teams choose to pin a link to their dashboard in their company Slack channel. 

Once you have uncovered a growth lever or two in your  business, the next step is keeping that momentum going. In order to do that, you need to know your numbers. A financial performance dashboard makes that process a lot simpler.

Contact us to create a Financial Dashboard for your business.