Measuring business performance with the right data dashboard
We recently held our Accelerate 2018 event, hearing from a range of industry experts on how to drive high performance and business acceleration. One of our key speakers was Peter Czapp, founder of the Wow Company, who shared practical advice with our audience of entrepreneurs and small business owners on how to use and measure business data effectively. Here is a round up of his valuable insight:
Using live feeds of real time data to influence key decisions and to accelerate business growth
By measuring and monitoring a handful of key metrics, and presenting them visually in a real time business ‘dashboard’, business owners can:
- Get comprehensive, real-time visibility into their organisation
- Access the data needed to make quicker, more informed business decisions
- Achieve significant time and cost savings by eliminating the need to run bespoke reports and search for data
- Identify areas of the business that require focus or improvement
Business dashboards have been around for several years. With the advances in connectivity, they are now able to pull data from a broad range of internal sources and business systems.
According to Peter Czapp, what data you measure and monitor should be driven by one factor alone: What do you want your business to deliver? What is your “WHY”?
The business dashboard can deliver any number of real time measures, but if they are not relevant to what you want for your business then they will not be effective.
The value of a sales pipeline
Off the shelf, most business dashboard software applications focus on sales performance. However, a pipeline forecast can be a more reliable indicator of a company’s health and growth potential than the sales that it is currently achieving.
A pipeline forecast doesn’t need to be complicated, and for some small businesses can be as simple as measuring:
- Number of networking events attended
- Sales calls made, or leads followed up
- Number of new contacts made
- New connections on social media
How well are you able to predict future sales? What should you be measuring to design an effective sales pipeline for your business?
Focus on profit not turnover
It’s typical for businesses of all sizes to forecast growth, and measure success, in terms of turnover. Business owners can almost invariably rank their clients in terms of spend, but rarely in terms of profitability. For example, could you name your top five clients in order of the profit they deliver to your business?
Focusing on the most profitable clients, products or projects, and diverting resources from the least profitable, can be an effective way to grow your business quickly. So what data would give you a real understanding or what is, and isn’t, profitable for your business?
Positive cash flow
Even successful, profitable businesses fail for the lack of cash. For some business owners, having six months cash reserve in the bank is what helps them to sleep at night. For others, even a single month’s reserve represents a waste.
What is your attitude to cash? Do you know in advance what your cash position is likely to be each month? In his presentation, Peter highlighted that The Wow Company’s own research suggests that simply by demanding 14-day payment terms, small businesses are able to reduce the time for invoices to be paid by 50%, and improve their cash flow accordingly.
So are you measuring how quickly your invoices are paid, and might changing your payment terms improve your cash flow?
Your own business performance dashboard
Establishing an effective dashboard for your business need not require a substantial investment in technology. Even the simplest of cloud-based accounting software, for example, can be linked to forecasting and reporting tools that give business owners the ability to access and interpret standard management accounting data more effectively.
So give some thought to the Key Performance Indicators that matter to your business, and consider the data that you should be monitoring to deliver your business objectives.
Can we help?
Events like O2 Accelerate are just one example of the ways we help support businesses. O2 has been constantly reimagining how people work for the last 30 years, and we are always looking for new and better ways to help small businesses.
For more information on how we can help you to use data to drive high business performance, please call 01235 433507 or visit o2.co.uk/business.