Business Metrics Dashboard: Weekly Success Indicators

Here some thoughts on how you could produce weekly metrics on business performance in a “dashboard” style report. This has been a hot topic recently with several of my mentoring clients.

The idea of a dashboard is to create a visually useful report each week. Visually useful means it isn’t just numbers and data. It’s a conclusion as to whether the information or data is good or bad, trending better or trending worse, or whether things are okay or urgently need attention. 

Another good feature of a weekly dashboard report is that it should not require “interpretation” by people. The more people you have looking at a report that requires “interpretation” (e.g. financial statements alone) the greater the chance for mis-interpretation, and the greater the chance for wasting time. It is always better to have your system (or your accountant/bookkeeper) do the interpretation for you according to the exact metrics you specify.

A great way to show information visually is to use color coding such as green light, yellow light, and red light.  Another good way is to show information graphically (e.g. a trend line moving up or down) or in bar charts or pie charts with size comparisons or other visual means to show the change in a situation — that is, growth, decline, staying the same, trending better, trending worse, etc. The point is that visual means are the best, rather than just rows and columns of numbers. 

Visual means also can be used to show trends (e.g. this period compared to the same period last year, this quarter compared to last quarter, this customer compared to this customer last period, etc.).

It is also important to begin tracking certain financial results on a formal and regular basis (formal = calculated on the same basis each time, according to the same methodology; regular = tracked on the same day each week or each month, depending on what period you choose).

• Cash in the bank and outstanding cheques, so you know actual cash.
• Accounts receivable in a DSO format (DSO = Dollar Value of Days Sales Outstanding).
• Accounts payable in a DPO format (DPO = Dollar Value of Days Payables Outstanding).
• Sales pipeline in a percentage probability format.
• The concept is somewhat detailed. Basically you divide the sales cycle into the three or four categories that make sense for your company, such as:
• Stage 1: cold call or first visit initiated
• Stage 2: demo or second call
• Stage 3: stated decision or interest shown to purchase
• Stage 4: the actual PO.
• The total dollar value of the expected sale for that customer is shown for its place in one of the four categories, and is then multiplied by the % probability of closing that sale. For example:
• at Stage 1: you might say 10%
• Stage 2: 25%
• Stage 3: 75%
• Stage 4: 90% (100% when you deposit the funds)
• This is a rather precise way of using the sales funnel not only to track where you are but to discipline your sales people and sharpen up their estimating ability. It’s quite accurate. And it gets around the famous belief that most sales people lie/exaggerate about the state of their leads!
• Volume of production per hour or per day; or dollar value of production per hour or per day. This is a productivity measure.
• All of the above can be tracked on a comparative basis (i.e. this period vs last period, etc.)
• Unfulfilled orders or backlog (if this makes sense for your business. It’s a leading indicator of what’s coming a few weeks down the road.)
• I also recommend a 12 month trailing average analysis for all of the above metrics so you eliminate the seasonality influence or the rigidity of the fiscal quarter or fiscal year as the only measurement period. 
• Some people also track other valuable metrics specific to them such as: number of customers today vs same day last year, number of complaints, total hours worked by all employees, etc.
• Some people also track key accounting ratios if such a thing makes sense for your industry — such as inventory turn-over, quick ratio, debt to equity ratio, loan to asset value ratio, etc., etc., etc. The sky is the limit on the standard accounting ratios. 
• Average sale by product; average sale by geographic territory; average sale by route; average sale by individual, etc.
• Here's a good article on determining the right metrics to choose.

As you can tell there are many different metrics you can choose. If your accounting system and your activity tracking system can automate the production of the report and it can be shared with key people other than just the owner, then you will have an excellent way to track the performance of the business over time. You can test and experiment to see which indicators are best for you.

We can book a call, by clicking on the calendar on the video on the home page, to discuss various ways to set up the right kind of weekly dashboard for you.