One of my mantras when I work with my own companies or others is no surprises. This is a big deal. One of the main reasons people go out of business is a surprise happens and there isn’t enough time, resources or capital to overcome the problem.

That’s what this video is all about. It’s about how to keep from having that bad surprise and then not having time to focus on making changes to keep your business afloat.


Transcript

One of my mantras when I work with my own company’s others is the principle of no surprises. Now this is a really big deal. One of the main reasons people go out of business is a surprise happens, and there isn’t enough time, resources, or capital to overcome the problem. And that’s where a great dashboard comes in. It keeps you from getting nasty surprises when it’s too late to do anything about it.

It’s also what this video is all about. It’s about how to keep from having that bad surprise and then not having the time to focus on making changes to keep your business afloat.

You might be thinking that, all right, I know what’s going on in my business, and I can handle anything that comes my way. That might be true for you. I can promise you it’s not true for the people in your company. So a dashboard is not only to keep you informed, although if you decide to become a passive owner, where your operation irrelevant, a dashboard will be absolutely crucial for you to do that. And on a day-to-day basis where you’re involved, you might not think you need it. You might be aware of all the things that need to be measured in your company, but I can promise you your key people aren’t.

Now the reason you need to have a great dashboard for your company is what we’re gonna talk about today.

And here are six things that I want you to think about when it comes to dashboards.
  1. Number one, your dashboard needs to give your predicted numbers for what’s gonna happen in your business. A dashboard is not your profit and loss statement. It’s really not your balance sheet, except for a couple of numbers. It might be the cash flow statement, but even that’s not predicted. That just tells you what happened to your cash, it’s not telling you what’s going to happen to your cash.
    • So some of the things you might be wanting to measure is your backlog for sales. In other words, how much business do you have on the books that you can expect to do over the next 90 days? You need to know what that number needs to be, you need to be measuring that number, and you need to be paying attention to it.
    • How many sales calls is your sales staff making? Not how much are they making in sales, although you do want to measure that, but the predictive thing is how many sales calls are they making? What type of sales calls are they making? Who are they making the sales calls on? Are they the best customers that you can possibly have? Those are the sort of things you want to be measuring when you’re thinking about what’s gonna be predictive and what’s going to happen to my company in the future.
    • You want to know what your accounts receivable is, ’cause accounts receivable is a sign of how much cash you have coming over the next 30, 60 and 90 days. And you also wanna have another accounts receivable number. How much of that is over 90 days?
    • Now this does come off your balance sheet, but you get the idea what means and what came about here. I’m looking for numbers that you have that are probably not in your profit and loss statement, probably not in your balance sheet, but you’re measuring it, and you’re just not sharing that information appropriately.
  2. Now the second thing that’s really important is you have to have at least 13 weeks of history in your dashboard. Why do you need this? Well, if I’m looking at one week, it might be a really good week, it might be a really bad week. But one week doesn’t tell me the story.
    • I want to see what the trends are. In the trends that I’m looking at, they’re gonna help me measure what’s gonna be happening in the future is to see what’s happened over the last 13 weeks. Are my receivables going up? Well, that could be a sign I’m doing more business, which is a good thing. Or it could be a sign of a bad thing is I’m not correcting my receivables on time, and as a result, I’m gonna run out of cash.
      So, you really need to be taking a look and saying, “Are my balances going up? “Are my balances going down?” How much cash do you have in the bank? Is that going up or is that going down? Now, my father used to say “You know, I don’t need to have a profit and loss statement. “I just need to look at my checkbook to see what’s happening.”
      Now that was correct for him, because he could get a sense of that. But the people working with him need to know what the cash balance are and see what direction those cash balances are going. If it’s going up, good thing. You probably don’t need to do anything about that. Now if it’s going down, you need to be paying attention to it. you need to be paying attention to is fast, because 13 weeks goes by really quickly.
  3. Make sure your managers, and this is number three, have dashboard responsibilities. Now, when I say dashboard responsibilities, means your managers have to be responsible for numbers that are on that dashboard.
    • It’s part of learning how to delegate. Now you can do this yourself. I know you can do it yourself. You’ve done it yourself for years, and you’ve taken responsibility for it. It’s time for you to share that responsibility with your managers so they can learn how to delegate, and you can learn how to delegate, and they can take responsibility and have the authority for making sure that those numbers that they’re responsible for in the dashboard are appropriate.
  4. You know, your dashboard, and this is number four, will have nothing except sales from your P&L. You’re not gonna have labor cost, you’re not gonna have, you know, in many cases. But what you are gonna have are things like efficiency. So, your P&L is not gonna be much. It’s not, there’s not much in your profit and loss statement that’s predictive about what’s gonna happen in the future in your company. So understand that yes, you wanna have a profit loss statement, yes, you wanna look at your profit and statement, yes, you wanna pay attention to your profit and loss statement, but it’s not something that belongs on your dashboard.
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  5. Your dashboard, number five, your dashboard is not about history. It’s about a future. Everything on your dashboard should be future-focused, future about what’s gonna happen in the future, because the purpose of your dashboard is to say, “I’m doing the things I wanna see happen in my company,” or “We’re not getting the performance “that we need to have for success,” specifically financial success.
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  6. So, without a good dashboard, the truth is, you’re just running blind. You really don’t know what’s gonna happen to your business. You hope good things are happening to your business, you have a gut feeling about whether your business is moving in the right direction or the wrong direction. You’re looking at your checkbook, you see how much cash is in there. Maybe your controller is looking at your checkbook, maybe your controller knows how much cash there is, but what about your operations people? Shouldn’t they know about that also?

So, you know, I first started a dashboard in my company when I was on the verge of bankruptcy. You don’t need to be in the same place I was. Having a great dashboard is gonna help you save you from the pain I went through. Pain that was completely unnecessary for me had I known how to build a dashboard, look at predictive things and realize that, although I was making money, I was running out of cash. And the truth is, having a profit is not nearly as important as having cash. And that’s the thing I want you to really take away from that, and a dashboard is gonna make sure that you have cash and you don’t run out of money.

So this is Josh Patrick. I am the founder of The Sustainable Business. Why don’t you scroll down and leave a comment below? And while you’re at it, DOWNLOAD our free eBook on Simplified Business Budgeting. You’ll find this is a great way to move into the world of having a great dashboard in your company. It’s a good way to simplify how you get your budgeting process.

You know, you start you on the road about thinking about those predictive numbers in your company that you need. Thanks a lot for stopping by. I hope to see you back here really soon.

Topics: Video, simplified business budgeting, Sustainable Business, delegation, business budgeting, dashboard, sales backlog, account receivable, trends, dashboard history, predictions

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