There seems to be a lot of buzz around businesses having a dashboard. Even Intuit has jumped on board and tried to provide this functionality in QuickBooks with its Snapshot Center. For those unfamiliar with this concept, a dashboard is one place a business owner should be able to look to see all of the key metrics and performance indicators of their business. To learn more about this concept, please visit my blog post: The Key Business Metrics Every Entrepreneur Must Know.
I need to preface what I am about to say with the disclaimer that I think every business should have a dashboard that outlines the key business metrics every business should measure, with some customization by industry and company, in a timely and accurate fashion. I take no issue with the concept of dashboards - in fact, I fully endorse it. My issue is related to programs and tools that are built to fulfill the dashboard function and how they are deployed. Most dashboard programs and tools are totally ineffective and fall far short of the sales pitch that caused them to be purchased in the first place. Why? Here are the two main reasons, as well as my suggestion for how to get the most value out of the "dashboarding" process.
1. WE DON'T KNOW WHAT WE NEED TO KNOW
Regardless of how well you think you know your business, your model, or your key metrics, I guarantee you will not get the needs of your dashboard right the first time. An inevitable part of the "dashboarding" process is you quickly learn what information is helpful and what information is not. It also forces you to ask additional questions that leads to better and more effective metrics. The challenge with most SaaS and off-the-shelf "dashboarding" programs is that they all require time, effort, and energy to set them up so they will work. It is hard to make any changes without feeling like you have to start all over again. Yes, I hope there will be some dashboard companies that will dispute this statement, but I have yet to see any of them fulfill on the commitment that the dashboards are easy to change once they get up and working.
2. THE INFORMATION IS NOT ACCURATE OR TIMELY
Once you know what you need to track, the next challenge is getting the information into the dashboard in a timely and accurate manner. Most dashboards pull data from the accounting or ERP system the businesses uses, and that information is usually only updated and reconciled monthly, and that information is usually not completely accurate until the 10th of the following month or later. The purpose of the dashboard is to get real-time feedback, so 10 days late is the equivalent of a year late in dashboard time. If the information is not right, then the dashboard will not be right, which will lead to bad decisions. If it is not timely (meaning pretty much real-time), it is useless.
The solution to these challenges is really quite simple, but it takes a little thought, discipline, and effort. Here are the steps to get an effective dashboard up and running for your company:
First, don't buy a dashboard. This step needs to wait - remember, software does not solve problems. People and intelligence solve problems, then software automates and simplifies the solution.
Second, make a list of what you think will be important to track each week. There should be key metrics from marketing, sales, operations, and finance on your list.
Third, create and excel spreadsheet, or a google doc spreadsheet for those of you living in the cloud, and list each of the things you want to track across the top to create several columns. Then, list the Friday of each of the following 52 weeks down the left-hand column titled "Week Ending."
Fourth, coordinate with your team where all of the information will come from for this document. It may need to come from several people, so commit them to get the information to you on time and in the format that will work best for you.
Fifth, start tracking for four weeks and see what everyone thinks. What information do they like? What information do they still wish they had. Then repeat this process for the next three months.
Sixth, once you feel you have your list of items you want on your dashboard pretty well-defined, start to investigate the best ways to automate the collection of this information into your weekly dashboard. The information will likely come from many different software application, including your accounting system, your CRM, and more.
Seven, start to investigate dashboard SaaS tools based on their ability to pull data from all of your sources (which may include some manual input).
Eight, purchase a dashboard that solves the highest number of issues in terms of automation, timeliness, and accuracy.
Nine, spend the time and resources it takes to get your new system set up the right way.
Ten, sit back and enjoy the fruits of your labors with the critical information you need to run your business right at your fingertips.
I could give countless examples of the benefits that companies reap when they have the right information on time. The point of this blog post is that business owners should refrain from making any type of "dashboarding" purpose until they get to step 8 of this process. If you don't wait, you will likely end up with the wrong solution giving you inaccurate information that will be useless and waste the company's resources in terms of the procurement, set-up, training, implementation, and ongoing support.
*Author's Note: Please note that for the purposes of this post I chose to step out on a liberal limb and turn dashboard, which is usually only used as noun, into the verb "dashboarding." I have surrounded each occurrence of this with quotation marks as a sign that I realize "dashboarding" is not a word, but it helps me communicate my point. Thanks for understanding!