Enterprise

Why business needs a ‘dashboard’ to help keep tabs on performance

team

An office meeting. Most business leaders lack key indicators to tell them how their ventures are performing at any given time. PHOTO | FILE

I recently drove my family for long hours to my rural home. Before the trip I did what most drivers do; I serviced the car and ensured that everything was in order.

On the day of the trip I checked the pressure in all tires, oil and water levels as well as the battery — just to be sure.

Along the way my daughter, who was seated with her mother on the front seat, would occasionally put things on the dashboard and I would remove them as soon as she placed them there.

After sometime I realised that she was concealing some information displayed on the dashboard that was important to me.

I explained to her that the dashboard was very important to the driver because it helps monitor important things such as speed, distance covered, fuel level and temperature which are crucial for safe driving.

My wife jokingly asked me whether I did the same for my business but I did not take it as a joke. I took it as a challenge with lessons for me and other business leaders.

One cannot drive a car if the dashboard is faulty or concealed. A dashboard may not tell you everything about the car and is not a substitute for regular checks, but it does display key navigation basics without which every driver would feel vulnerable.

Most mechanical problems in modern cars are displayed on the dashboard. By looking at it a driver gets a lot of crucial information and a timely warning should something go wrong with the car; whether it is an engine fault, a door not well locked or a passenger who has not buckled the safety belt.

Every business needs a dashboard — a set of key indicators which show the condition of the business and give warnings when something goes wrong.

Most business leaders lack key indicators to tell them how their ventures are performing at any given time. They make decisions based on intuition rather than facts.

Basically, performance indicators are metrics used to help a business leader define and measure progress towards achieving objectives or critical success factors.

They are quantifiable measures that can be expressed in either financial or non-financial terms and reflect the nature of the business. 

Key indicators that need to be displayed on your business’ ‘‘dashboard’’ vary from business to business and may include figures such as of orders coming in, expenses as they occur, stock levels, account payable and receivable.

Critical success factors are specific things that must be done in order for the business to achieve its set goals and objectives.

These include measures, for instance to decrease cost by a certain percentage, increase sales or market share by a definite figure and introduce or improve products and services with timelines.

These figures need to be updated and monitored as often as possible to reflect the true position of business as at that moment.

Waiting for the accountant to generate a report at the end of trading or accounting period may be too late for the business.

Whereas in some businesses getting the report monthly makes sense, some business leaders may need reports daily or weekly in order to make timely decisions.

Lack of an effective ‘‘dashboard’’ is what makes some business leaders fail to realise on time that they are making losses until after they have sold all the stock and have no money to restock or expenses have run wild.

Mr Kiunga is a business trainer and the author of ‘The Entrepreneurial Journey: From Employment to Business.’ [email protected].