Grow Your Business with a Financial Dashboard

Eric Weynand, Founder

Are you familiar with a financial dashboard? There’s an old saying in business: if you can’t measure it, you can’t manage it. It means that business owners need to know the critical numbers that underpin their business if they want to grow and thrive. 

But unfortunately, for many companies, this vital information is spread across many different people, programs, websites, and services. 

Thankfully, financial dashboards provide a simple and elegant solution. Read on as we explore the significant benefits of dashboards and how to construct your own.

Benefits of Using a Financial Dashboard

Some business owners currently getting along without a financial dashboard may wonder if it’s worth the time to set up. The answer is unquestionably, yes – and here’s why.

Monitor the Status of Your Business

There’s no better way to have the most up-to-date numbers for your company readily at hand than a financial dashboard. When things change in your business, they’ll be reflected in real-time or near-real-time, putting status updates at owners’ and managers’ fingertips.

Dig Deep into Certain Aspects of the Business

A well-calibrated financial dashboard provides more than just top-level numbers. It also enables owners and managers to go in-depth and look further into specific areas. This allows them to pinpoint exactly where issues are occurring and quickly make corrections.

Drive Decision-Making

Every company is trying to make better decisions about its business and finances. Your financial dashboard will give you the necessary information to make those decisions correctly and promptly. 

When you have questions about where to go next, you can turn to your dashboard for answers. Simply seeing the status of various metrics may do wonders to unlock potential growth or new efficiencies.

Improve Efficiency and Productivity

If you’re like many companies, vital information may live in different programs, be found on different reports, or be compiled by different teams or staff members. This makes simply getting the information you need to make a decision a sometimes lengthy process that costs the company time and money. 

With a financial dashboard, you’ll be able to scan key performance indicators at a glance without having to compile multiple reports or check with different employees.

What to Include on Your Dashboard

A financial dashboard is only as valuable as the information it displays. Every industry has key performance indicators that should be a prominent part of your dashboard. 

However, all businesses can benefit from having these crucial metrics included:

Net Income

Net income, representing the company’s total income minus all operational and financial expenses, is one of the most valuable stats for a financial dashboard. Decisionmakers should be able to see:

  • Whether it’s positive or negative
  • Where it falls on a percentage basis
  • Whether it’s improving or declining
  • How this figure compares to budget expectations and last year’s net income

Healthy, stable small and medium-sized businesses should look for at least 10%, though 15-20% is ideal. However, still-developing companies may be comfortable with less net income if the money is being invested in growth.

Cash Flow YTD

The second, equally important number to know is business cash flow

How does it compare to net income, and what’s driving that difference? How has your company’s cash flow changed over time, and how does it measure up to expectations? 

One key thing to look for is if cash flow from operations is lower than net income. Unless this is a temporary hiccup, it could be a sign of collecting too slowly from customers or not collecting at all.

Revenue, Gross Profit, Opex

Think of cash flow and net income as “bottom line” metrics. These critical numbers are a result of other internal stats like:

  • Revenue
  • Gross profit
  • Cost of goods sold (COGS)
  • Operating expenses (Opex)
  • And more

These numbers belong on your dashboard because they help you understand how those, most important, metrics are being calculated.

Is your revenue on track compared to previous years and projections? If not, check sales figures to determine whether it’s an issue of volume or rates/pricing. 

Is your margin what you expected? Business owners who find a significant deviation should examine direct costs. 

Finally, Opex spending can also be monitored to reveal issues like marketing not bringing an adequate return on investment or over-hiring relative to the current level of business.

Balance Sheet

When examining your balance sheet, keep an eye on net working capital (NWC), which should be substantial enough to cover future operating expenses if sales unexpectedly decline. Next, consider your coverage ratio, which is found by dividing NWC by Opex. This provides an idea of the company’s cash “runway” in the case of a downturn.

It’s also crucial to monitor the current ratio, found by dividing current assets by current liabilities. 

Healthy companies will ideally find this number to be greater than 1, and the higher, the better! It is possible to let this get too high, in which case money may be better invested elsewhere, or companies may wish to use vendor credit to improve net working capital.

Let PlotPath Help You Grow Your Business

Financial dashboards may not sound cool, but they’re one of the best ways for company owners and managers to take control of their numbers and grow their businesses. And one of the best ways to do that is with the help of PlotPath and its expert finance team. 

In fact, we built a monthly financial “dashboard” to help our clients excel in this area. You can check it out here: PlotPath’s monthly financial “dashboard” 

We will help you work through our dashboard, build one even more specific to your business, interpret the data, and figure out how the numbers stack up to your financial goals. So contact PlotPath today to get started!