What Is Your Business Dashboard and 3 Reasons You Should Have One
You no doubt speak to other business owners, and if you don’t talk about them yourself, you may have heard them talk about their KPIs. If you haven’t already got them, these are your Key Performance Indicators.
These are basically the things you know drive the growth of your business. This could be number of leads your company gets for new customers / clients on a monthly basis? Conversion rate of the leads? The average length of your sales cycle? The average order size from customers? Some of these are relevant regardless of the business you are in, some are more specific to your industry.
In his book ‘Good to Great’, Jim Collins refers to a company’s companies key economic denominator, a key measure which drives profitability i.e. profit per X. That might be profit per property sale if you’re an estate agent, or profit per wedding if you’re a caterer.
Although collating information into a dashboard is easy for most from a technical sense, what is the point in it? More often than not, not collating this data comes down to time, and not seeing its importance, so lets clarify why it is:
What you can measure, you can improve.
No doubt you want to grow your business, hopefully that’s partly why you are reading this! But how would you know where to start? Unless you are growing through an acquisition, organic growth is your route. To do this and grow at a quicker pace something needs to change. However you don’t necessarily know what change will have the biggest impact and whether it will work at all….unless you keep score.
For example, you may have a number of sources of customers / clients. But depending on their source (referral, website enquiry, walk in etc.), they may convert far quicker or for a far higher average value. If you measure and understand this, you can divert resources to market to the most profitable source.
To use another example, your sales cycle may be 4 months from speaking to a customer, to them deciding to do business with you. But what if you could cut this in half? That would be very positive for your annual revenue. This might include better sales collateral, more training etc., but without measuring the sales cycle, how would you know what changes are working?….you wouldn’t. How would you then know what to repeat in other locations and with other staff?
Its clear you need to invest in new areas to grow your business, but without measuring the impact, it’s a guessing game.
Helps you focus resources.
Another point Jim Collins sights when highlighting the difference between good and great companies is the ‘hedgehog concept’. In essence, focusing on a niche / speciality which you can focus on in your market. Among other things, identifying things you are very good at, or do differently, allows you to capture market share, avoid price compression and also understand where best to direct investment in your business.
But the trouble is you might not be that sure where that speciality lies, or which is the best option to pursue. After all, if you knew that, you would probably have already cracked it.
Quite often you need an element of trial and error whether that’s incremental changes to your product / service, or trying to attract customers a certain way (marketing). If you measure the traction of each thing you try, you start to build a picture of what works. And if you know what works, you know where to continue to invest.
It keeps your team focused and clear on their own and the company’s measures of success.
One key element of keeping your team motivated is making sure they feel part of a bigger overarching objective. I think we can all agree that if we are undertaking a task, without any real understanding of why, or how that is ultimately beneficial, we don’t always feel very motivated. Also, without any clear measure of progress or wins, who knows if you are achieving what you want to. It’s also been proven that small incremental milestones improve satisfaction and productivity, therefore being able to articulate this is very important for everyone.
By having a dashboard in place, either for the company, or the specific department, you are able to communicate to your team the positive (to celebrate and go again) or negative (rethink, pivot or keeping going) outcomes. This in turn then provides motivation and sense of being part of something bigger.
Putting your dashboard in place does require initial work, but there are clear tangible benefits to doing so. It is a great starting point to begin to understand things about your business you probably already knew, but couldn’t quantify….be that good for bad. To use an analogy, you go to the doctors to be receive the diagnosis first, then the treatment. So if you don’t diagnose your company’s ailments first, how can you prescribe the cure!