This is for small car but what about a bigger vehicle like a plane? For this you need a much more sophisticated dashboard. If you are a Boeing 747 airline pilot with hundreds of people under your care, the dashboard of your plane will have many more dials, switches and flashing lights, to cover all parts of the plane including electronics, fire suppression, passenger comfort, pneumatics, hydraulics, lighting engine control, auto pilot, air pressure, weather, fuel levels, brakes... and a whole lot more.
There are literally thousands of parts in a plane that need attention; nothing can be left to chance. A pilot who is not on top of these things will not be a pilot for long, it’s just too dangerous. These dashboards are the reason why literally thousands of planes fly every day and nearly every one of them arrives safely to its destination.
So do you have a dashboard for your business?
Even for small businesses, indicators are vital, but this becomes increasingly more important as the business grows and gets bigger. As you employ more people it’s very easy to lose control of your business and be blindsided by a problem you did not see coming. By the way when things go wrong there are always early indications or signs, the problem is that without good information you won’t see it until it’s too late and it causes more damage than it should. If you have a little time, you always have options. I am not saying you will never have problems, but that you will have much more time to deal with them, adjust your course, and reduce the severity. It’s exactly the same with your business.
When the fuel gauge falls to E, it’s time to do something about it. But what if you didn’t know? What if you were the pilot of a huge 747 and the one who was responsible for all the passengers aboard (including your employees and your family). What if you ran out of fuel and the engines stopped. What if your plane started falling out of the sky? What if it could all be prevented by seeing the early warning signs?
So do you have a dashboard in your business? And what should be on it?
Here is a checklist of some of the things you should have on your dashboard, depending on your business and industry:
- Profit/loss from each advertising campaign (yes you need to keep a record of how much money each campaign loses or makes – so you know if it is worth repeating)
- Cost to get a new customer or lead
Sales – you need to know:
- How many leads per month you need – and how many you are getting
- How many walk-in sales per month you are getting
- Conversion rate from leads to customers
- Average dollar sale per customer
- Sales needed each month to break even (hey, wouldn't it be great to know at which level of sales you start making money, and if you are on track each week. If you are short you still have time to get back on track.)
Margins – you must know:
- Gross profit margin each month
- Gross margins on largest volumes of services or products
- Billable hours
- Percentage of wages to sales
- Monthly profit and loss
- Cash position (calculated as money in the bank + accounts receivable - accounts payable)
- Stock levels
There are many more, but this will get you started.
Imagine that you are on unplanned leave from your business for the next three months. You have a manager running your business for you. What would you want to know? You can’t go into work so the only way you will know if your business is okay is by the dashboard reports your manager gives you.
- List the main indicators you must know about, so you can sleep at night knowing the business is okay, eg. profit, sales, key expenses, key customers.
- Decide on what the target is for each of these indicators, eg. sales target $300,000 per month.
- Turn this into a dashboard report you use weekly/monthly for your business.
- Use it every month from now on, so you know at a glance if any of these important areas need a course correction.