Insight and focus are two powerful tools for improving your business and increasing its ability to generate more and more cash over time.
Insight provides the meaning behind the numbers you use to manage your financial results. Focus is your ability to laser in on the parts of the business where you have targeted your improvement efforts and gauge the results of those efforts.
A graphical dashboard can harness both insight and focus in a very unique way. I have an example dashboard below that shows you what I mean. This dashboard is focused on cash flow.
One of the mistakes entrepreneurs make is to ignore the various drivers of cash flow because the monthly financial statements don’t exactly make it easy to see. I have found it very helpful to create a cash flow dashboard so ownership and management can see almost instantly what’s going on with the cash flow and the various drivers of cash flow.
This dashboard was created for a franchise company and it makes it possible to mouse over the various franchisee locations on the left and see each driver of cash flow. To try to do this with only the basic financial statements would take hours. In the dashboard, it is instant and it displays the information graphically (which is especially helpful if you are not a numbers kind of person).
Mouse over the locations and play with the dashboard and you will see what I mean.
There are a number of qualities that make this dashboard unique. One is the section in the top center labeled Components of Cash Flow. You can see graphically how each of the various drivers of cash flow impacted cash. You can also mouse over each bar and see the exact dollar amount.
Most business owners look at net income and believe that if they are making money than they are generating cash. It would be nice if profits equaled cash flow – but they don’t. You have to have visibility across all the drivers of cash flow if you are really serious about managing one of your most important assets. You can’t just focus solely on the income statement.
Another way to use this same dashboard is to replace the fields that show locations on the left side with time periods. For a single company without the need to compare locations or franchisees, I use that area for each month of the year. That way you can mouse over each month and see exactly what happened to the cash in any particular month.
It’s a very nice tool for helping you harness the power of turning financial data into insight. It also makes it so much easier to get your team focused on the key drivers of cash flow so they have a better shot at helping you increase the cash generating power of your business.