Now you know where you are going and what you want to achieve, it’s time to set up your dashboard.
What do you think I mean by your dashboard? What does your dashboard on your car tell you? How fast or slow you’re going, whether you have enough fuel, oil, and water. It gives an indication about whether you’ll make it to your destination. It’s the same in business.
The things on your dashboard are referred to in ‘Accountanese’ as KPIs or Key Performance Indicators – essentially they are the small number of things that will tell you if you are on or off track in relation to your plan.
What do you consider are the four or five most important measures you should have on your dashboard? These will be a little different in each business.
Draw the following examples up on the flipchart:
For example, if you’re a manufacturer, your most important KPIs might be:
– Gross profit percentage
– Cost of rework
– Work in progress days
– Debtor days
If you’re a retailer, your KPIs might be:
-Gross profit percentage
-Average client spend
Whatever the top 4-5 are for you, they MUST be captured and reported on a regular basis. It’s important that you focus on a small number of KPIs, as the top 4-5 will drive most of your business improvement.