The Power of the Small Business Dashboard
A business dashboard is a powerful tool for quality business management decision making. As the term dashboard implies, it is a quick overview of performance in a range of areas critical to the operation.
The main function of a business dashboard is to let you know when and where there are any deviations across the key performance areas of operation. Before the business dashboard existed, business owners and managers compiled and reviewed large volumes of data on a routine basis to gain this same perspective. Given the rate of change that all businesses operate within today, this approach quickly became inefficient. Today, there are many different options available for gaining a quick glance at your business key performance indicators (KPIs).
KPIs include tracking sales volumes in real time, monitoring expenses, measuring production runs and of course, assessing profitability. While spreadsheet software can be used for this purpose, it is typically less efficient to build and maintain than an off-the-shelf application or a cloud-based application. The objective is to use a dashboard solution that fits your business needs. One of the most common choices for small businesses in this regard is Intuit QuickBooks, which offers both desktop and cloud-based options.
As a simple graphic that fits on the average sized computer screen, a business dashboard reveals only what you need to see to either be assured that business is operating as planned, or that there are performance deviations that require attention. The number one benefit to this approach is that it saves time. Instead of studying all performance indicators in detail, the manager can assess performance at a glance and only respond to areas of deviation.
Management by Exception
A business dashboard drives Management by Exception (MBE), a practice that allows you, the business owner, to respond only to those issues that require your level of attention. While the dashboard concept suggests that business management is straightforward once it’s in place, keep in mind that it is only the compilation of a more granular perspective.
By setting up your business dashboard in collaboration with your part-time CFO advisor, you can establish which areas of the operation require routine monitoring. As part of a broader strategy, this will allow you to target areas where deviations will have the most important impact on your operation and bottom line. It will also help to establish guidelines for appropriate responses when deviations occur.
“…that the conventional role of the Chief Financial Officer (CFO) is to oversee all of the financial activities of the business? As a senior position in a large firm, the CFO is responsible for the capital structure, investments and how income and expenses are managed. In essence, the CFO plays a major role in the success of the business over the long-term by working collaboratively with and through others. Today, this level of expertise is available to small and mid-size firms on a part-time basis offering the same value, across-the-board without the full-time expense.”
– See more at: http://www.buzgate.org/8.0/ny/ch_cfo_dashboard.html#sthash.aoXK8Tl2.dpuf