How can you be sure the work and resource you’re investing into your business is having a direct impact on your growth and bottom line?
You need to get visibility into your business. You need to see not just the bottom line, but everything above it.
But it’s hard enough to get the information in front of you, without then having to interpret what it all means. How can you avoid information overload headaches?
There is a solution and it’s built into most modern accounting software:
Driving with data: Getting visibility via dashboards
Most of us have created a graph within a spreadsheet application.
All that’s needed is to highlight a few columns of figures, then hit the graph icon on the toolbar and follow the steps. Hey presto—you get an instant bar graph or pie chart representing those figures.
Modern accounting software takes this one step further with dashboards.
For example, with just a few clicks you can transform your profit and loss ledger into a series of attractive tables, charts and stand-out figures.
Carl Reader is an author, speaker and small business expert. He says:
“We’re in an age now where the data and the reports that were available to a business owner or the board are at the level that only corporations had a few years ago.
It’s transformational. It provides the business with more than just a list of numbers and words. It translates that data into indicators that are easily understood.
Historically, accounting has always been very historic, looking in the rear-view mirror. Nowadays they can look at actually what’s happening up ahead. It’s game changing for any business.”
Your dashboards might show overheads, expenses, net profit percentage, or more.
If data is made attractive and accessible then we’re likely to be able to understand it—and so we see trends and gain real insights which can be acted on.
Three reasons why accounting dashboards are awesome
But that’s not the only benefit of dashboards within accounting software.
- Live data—know what’s happening right now: A big limitation with viewing your data through just a spreadsheet is that the data is old—and more often than not it’s down to you to update it. But dashboards pull through live data—typically the key performance indicators (KPIs) that you need to monitor. A dashboard will always reflect the data as it is now, and not just as it was when a spreadsheet or report was initially created.
- Drilling down—same old data, fresh insights: A key feature of dashboards is that they’re often interactive. They’re not just there to look at! You can click on the column in a graph and turn it into the focus. This might mean you’re presented with additional, more detailed information about that figure or it might mean that the rest of the dashboard updates accordingly.
- Built-in intelligence—automatic and clever: Dashboards are often intelligent. The software knows the nature of the data, as well as the raw numbers or other values. For example, if you create a dashboard showing sales figures that have the locations attached then you might find the software will realize and magically show a map with heat spots reflecting the sales data. This means you can instantly see where you’re selling the most—and the areas where more attention might be required.
But how does this translate to actual day-to-day benefits for the average small business? There are four key ways:
- It saves time—giving you more time for your business;
- It ensures you remain in touch with your business;
- It allows much more rapid decision-making by providing actionable insights;
- It provides true visibility into every part of your business.
All of this allows for growth.
But dashboards need to be coupled with sound business basics in order to take full advantage of the opportunities open to you, as well as identify and mitigate risks. So, here are nine areas to focus on using—enabled by good use of your accounting dashboard.
1. Define your goals and determine your measures for success
Make your goals challenging, but achievable. Do you want to increase customer retention, improve market share, penetrate a new market segment, or invest in R&D? Be specific and make your objectives measurable.
And use your dashboard to monitor data related to these areas on a regular basis.
Business goals are often too vague, so use very specific language to describe evidence of your business goal being achieved. It is this evidence that becomes the basis of what you measure.
2. Set up meaningful KPIs
KPIs are what dashboards are all about, and regular monitoring of them is made easy if you configure your dashboard correctly.
Make sure your KPIs are relevant to the objectives of your business and the business processes that must improve to successfully reach those goals.
KPIs are most successful if simple but not simplistic, and when managers and employees feel a strong sense of ownership over them. To enable this ownership, you might choose to share your dashboard with any key employees you may have, or even outside helpers like your accountant. You might even create special ones for these people specifically.
3. Develop methods to collect and organize data
Determine a process for tracking and reporting all relevant data. Report on trends that emerge from your findings on a regular basis. Make sure that all business processes are included in your data gathering, such as marketing, sales growth, market share, product quality, workforce, training and budgeting.
Without these practices in place, your dashboard can’t accurately reflect what’s going on.
4. Track your revenue versus your goal
Make sure you track your actual income versus your goal income not just every year, but each month and, if possible, each week. Late payments can cause havoc with a business’ bottom line, and you can use your dashboard to monitor this.
Use a mobile banking app to create invoice templates, keep track of which have been sent, viewed and paid, and accept payments in the app too.
5. Track your expenses
This is probably the one part of your business that you don’t really want to grow. But by having a proper overall view of expenses as part of your dashboard, you can project your profit and make better, more informed decisions about spending money elsewhere.
6. Track your competition
This data sits outside of your everyday accounting dashboard, but is no less important.
It’s all very well focusing on your own KPIs and business expenditure, but it’s imperative to have a clear idea of what your main competitors are up to as well. Obviously hacking into their computer networks would be a clear breach of cyber security, but there’s a lot of information in the public domain: look through annual reports, do internet searches and read industry press and trade association publications.
7. Measure marketing effectiveness
Effective measurement lays the groundwork for future plans, so keeping track of results is the only way to improve your marketing efforts. The key is determining which data should be collected. Your marketing results may be measured in sales, market share, store traffic, number of inquiries or reduced complaint rates, or other metrics. Much of this can be shown within a well-configured dashboard, sometimes pulling in data from other sources (e.g. Salesforce integrations), allowing you daily insight.
8. Boost employee metrics
Having top employees who are motivated is critical to your company’s success. Track the effectiveness of your recruitment methods and retention levels, as well as employee satisfaction and performance, and then you’ll know when to hire, when to fire, how much you’re spending on your workforce and for what ROI.
9. Apply the information
Analyze the intelligence you’ve collected from your dashboard, draw conclusions, and make recommendations based on it.
Develop a plan for seeking out opportunities to demonstrate your company’s strengths. If weaknesses are critical drawbacks to your company’s success, develop a plan for overcoming them.
The old adage that you can learn from your mistakes may sound glib, but when it comes to business growth, it really is the truth.