Factoring Blog - For Small Businesses

Recently I’ve been thinking of implementing a business dashboard for my business. So I’ve started reading up to see what kind of financial indicators I should be tracking in my dashboard.

According to this article in the New York Enterprise Report, you should identify and track 5 to 10 key measurements and performance indicators. Some indicators will be the same for almost all businesses — indicators such as cash flow, revenue and sales.

However, for some businesses you will need to track the indicators that are unique to that type of business. Examples:

Restaurants: Whether a table holds two or three parties in one evening can have a big impact on the bottom line, so “table turns” is a unique and critical indicator in the restaurant business. A restaurant’s dashboard report should track table turns, along with food sales and other indicators.

Manufacturers: Margin is important for manufacturers, but utilization of the plant is also a crucial piece of information. This can be tracked through machine- or manhours, and it’s important to know the capacity of the facility.

Professional Services Firms: For law firms, accounting firms and consulting firms of all types, it’s all about billable hours. Tracking the staff and how time is recorded and billed is paramount. The key indicator here is realization — how much is actually billed out of the pool of available hours. A dashboard will alert you to whether you’re billing enough hours, and if you’re not, you have the opportunity to identify low performers and boost billing before it drags down your profits.

But I guess the main takeaway I got from reading up on dashboards is that they are early warning signals — if you use them right.

They have to be short enough to focus on a set of numbers that can appear on a single page at a glance.

MyBizHomepage.com is one dashboard designed for small businesses, that works with QuickBooks. It’s free and works seamlessly without added work or keystrokes.

Another option is an Excel spreadsheet.  Once you set up a template, the information can be loaded in and updated regularly.  The downside with a spreadsheet is that it may be a little too “manual.”

This entry was posted on Tuesday, June 3rd, 2008 at 1:56 am and is filed under Business Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.