Every morning when I get in my car I know instantly whether my car is safe to drive.
I have the Blackpool illumination style lights show on the dashboard and then, fingers crossed, they all go off and I’m good to go. Some days though, there’s one left on. Now what am I going to do? Let’s be honest, I’m no petrol-head and whilst I know what the main dashboard lights are all about there are plenty that I haven’t got a clue about. That’s when the trusty handbook comes out of the glove compartment and tells me exactly what the problem is & how urgently I need to deal with it.
So, what has that got to do with running a business?
Well, the way you run your business is just as important, and probably more so, than how well you maintain your car. So what’s on your business dashboard?
Still no idea what I’m talking about? OK, here’s a summary. Your business dashboard should tell you how healthy your business is, and if there’s a problem, where it is and how urgently you need to take action. Somewhere within your business there should be a clear, simple summary of all of the crucial numbers that drive the profitability of your business – your dashboard.
So what might you include on your dashboard?
It’s not just about where your business is right now, it’s also about where it’s likely to be next week, next month or next year. So, you need measures that tell you what’s in your pipeline. How many leads did you generate last month? What was your conversion rate? How much did each customer spend with you and is that going up or down?
There are also the core financials – what was expenditure like last month compared to the previous month or previous year? How much stock are you holding? What is your most popular stock? How’s your credit control at the moment? Are people paying you on time or do you have a few stragglers?
One of the key things to bear in mind if this is starting to sound overwhelming is that you as the business owner don’t need to be the person who compiles all of this data. All you need to know is that it’s getting collated somewhere and that you have a process in place that will flag up any numbers you need to worry about – just like those mystery lights on my car dashboard! Don’t get bogged down, keep your numbers simple & understandable & build up what you measure and review over time.
When you learn to do this well you’ll also learn to love your numbers. And that’s a promise!