Maximizing Small Business Success with a Financial Dashboard

Do you ever feel like your numbers are an equation that you have no idea how to approach? If so, you’re not alone – a lot of small business owners feel the same way. While there are a lot of factors that go into managing your small business finances, a strong financial dashboard can help you maximize your success.

Here’s why: unless you’re just a “numbers person” and inherently see the story behind your numbers, a lot of them aren’t likely to make a lot of sense. (Believe me, a lot of business owners fall into this category!)

A financial dashboard can help you by putting all of the data into a comprehensive visual presentation that will equip you to easily spot trends, issues, and upswings, allowing you to more easily make strategic decisions.

Here are some of the most important things a financial dashboard can make it easy for you to track.

Master Cash Flow Tracking with a Financial Dashboard

When you’re first starting out, it’s essential to start bringing in cash flow as soon as possible; as your business gets more established, it’s vital to keep it coming in.

How can you track what’s actually coming in the door, though?

This might seem like a silly question; after all, when you get a payment, that’s cash flow, right?

Technically, yes, but how can you tell if you have a decrease or increase in cash flow? If you have enough to cover payroll and bills while still taking a paycheck and/or owner’s cut?

And more importantly, if you have enough consistent cash flow coming in (over at least 3-6 months) to move forward on your growth or expansion goals?

If you try to ‘guesstimate’ these numbers, you’ll nearly always end up overestimating them. A financial dashboard, however, will give you the real time numbers and trends.

Taking Charge of Your Expenses

Do you plan out your expenses ahead of time, or do you just sort of take them as they come? If you’re like most business owners, you do a bit of both.

You probably already have a good idea of your payroll and constant monthly expenses, but what about the annual renewals that always manage to catch you off guard? Or the incredible opportunities and discounts that seem to present themselves without much warning?

With a strong financial dashboard, you can take charge of your expenses instead of being blindsided by them. You’ll know what’s coming and when so you can budget accordingly, and when an amazing opportunity comes your way, you’ll know immediately whether it’s in the budget or not.

Budget Variance Reports and Percentages

As your business grows, you’ll likely find that your costs and revenues do as well. How can you determine whether you’re meeting your goals for both cash flow and expenses?

This is where your Budget Variance Report comes in. The variance is simply the percentage between the goal that was set and the reality of what occurred.

For example, if your goal was to make $250,000 in sales this quarter but you only made $200,000, that’s a variance of -20%. Although it’s not great news, it lets you know where to cut expenses and where to shift resources or strategy. (Trust me, it’s better to know this up front than to have to put out a fire 6 months down the line.)

However, if your goal was to bring in $250,000 in sales and you actually brought in $300,000, this is a variance of +20% – and it lets you know that not only do you have a cushion to work with, but it may be a good idea to evaluate what worked better than expected so you have a good chance of repeating it.

If those results keep up over the next quarter or two, it also lets you know whether you have room to hire.

By dealing with percentages rather than just raw numbers, you can more easily spot and track trends – and your financial dashboard will let you do this at a glance. (Trust me, I used to run my law firm business in the part of my dashboard that held my Budget Variance Report.  Learning to see these numbers is a HUGE game changer!!)

Profitability Determinations

One of my favorite aspects of a great financial dashboard is that it can allow you to determine profitability by department and even by team member. This, in turn, can allow you to make strategic decisions in real time throughout your company.

Now, it is important to realize that not every person or department is going to be as profitable as another. For example, your Marketing Department may not show an immediate profit, as their job is to bring people in (rather than to sell or produce billable hours). In other words, their activities often won’t translate directly to profits.

Instead, you’ll be able to track the profitability of other departments by their actions. When they bring in the right people (and those people are handled correctly by Intake, Sales, and Service), you’ll see the overall revenue increase they bring in.

However, there are roles that can be directly tied to profitability. You may have a salesperson with incredible closing rates or a person on your service team that bills more hours than anyone else. Being able to see the strengths of these people on your financial dashboard can help you keep them in their zone of genius while assigning other tasks to people who are better able to do them.

Everyone on your team has a part to play; being able to see the trends on your financial dashboard will help you make sure you’re equipping them to do so.

Forecasting

Lastly, your financial dashboard is a great tool to use for forecasting.

Do you ever feel like you’re just sort of playing roulette with your business? Like you’re just randomly choosing a number or outcome and spinning the wheel to see if it happens? (Again, if you said yes, you’re not alone!)

A strong financial dashboard can clearly show you your trends in a way that makes it easy to forecast and plan. If your numbers are going up consistently over 2 or 3 quarters, you may feel a lot better about hiring. If they’re going down, you’ll know that it’s time to shift gears and focus on what’s selling the best (and what’s most profitable).

There really is so much that the right financial dashboard can do for you – if you’re ready to build yours, let us know. We’re here to help!