It seems like hardly a day goes by that I am not asked about dashboards, especially after running the recent RS-SQL Statistics program for the second year. This term is not new but has certainly gained popularity, possibly due to the proliferation of web-based dashboards available today. To be clear, dashboards are just ways to view data in a more meaningful way, usually graphical, so that the raw data becomes useful information. Who doesn’t want to gain a greater knowledge of their business, but this can seem challenging for smaller businesses, especially as capturing data can be time-consuming and expensive.

This is where one of the hidden benefits of RS-SQL comes in. You will be amazed at the amount of operational data that is captured every day, simply by using the software. Every workorder created, barcode scanned, and delivery made creates many activity records to be recorded in the database. This data could be the secret ingredient for learning more about your business.

Now I can understand that you may feel that you don’t have the time or resources to do much with all this data, but time and efficiencies are the very reasons to focus on the right metrics for your business.  If you do make the decision to go ahead, then the first step is to decide what you will use the information for? This may seem backwards but you need a reason to gather the data and create metrics. There is no point simply taking data and creating pretty dashboards that have no business value. You also need to ensure that your whole team are involved and understand the value of collecting accurate metrics. For example, if you want to measure your on-time deliveries as a percentage against the required-by date/time, then you need to be sure your drivers are scanning delivery barcodes at the point and time of delivery. Accurate data allows you to create accurate metrics; otherwise it’s like cheating in a test where the only person you really cheat is yourself.

As you set up your first operational metrics, you will need to learn how to query RS-SQL to get the information you require. This can be done through the graphical user interface (GUI) or through external reporting tools, such as Microsoft Reporting Services . Start simple and build up your first metrics, based on what information you need. The first steps will be just that and over time the metrics will grow in complexity and the level of information they are providing you. Over time, you will understand more about the relationships between metrics to help make better business decisions. You will also learn that, as you consider an evaluation or re-evaluation of metrics and measurements, you must take stock of where you’ve been, where you are today, and where you look to go in the future. Without metrics and trend reporting to track progress, you’ll have a much harder time achieving and communicating business goals and your startegic plan in a structured and timely manner.

Usually its not sufficient to create one dashboard as generally each department manager wants their own dashboard. RS-SQL can only provide a certain amount of data, which is primarily operational in nature, however other data will need to be sourced from your accounting package, your sales management package, and other software packages that you use. Once you bring all this together, it is best that you build two dashboards: one a cumulative dashboard of high-level metrics for the business owner and then secondary dashboards for department managers. As you grow, this will keep departments and managers “aligned” with strategic goals. While the high level owner dashboard includes all performance, the department managers will have far less to focus upon but still offer and receive key financial and other performance information necessary to drive their business segment. Generally it is also a good idea to stick to no more than four metrics in each business area.

So what metrics should you consider? Below are some ideas that may help your business grow: 

Financial Metrics
• Line of Credit – banking and funding relationships are key in tough times and growth times!
• Current Ratio – important to bankers and solvency = current assets / current liabilities
• Cash Flow – critical to small businesses – track individual sales at dollar levels
• Debt to Equity – measure of leverage to worth – total debt / total equity (or net worth)
• Owner Reinvestment of Profits – affects working capital and growth funding

Cash Flow (month to month changes)
• Cash in Checking
• A/R balance
• Credit Balances (Credit Line Availability)
• A/R Average Days to Pay

Sales Metrics
• Total Sales Revenue (including storage, services, products, verticals, industry SIC code, etc.)
• Total Value Added Revenue (and as a % of total revenue)
• Service % of Sales Revenue
• Margin target and performance by sales representative (e.g.: minimum 50k in margin)
• Pipeline (3 months & 6 months), Work in Progress (WIP) and backlog
• Year on Year trends – Return on sales (above).
• New Business vs. Installed Base
• Won/Lost Reports – determines competitive challenges, product performance, training etc.
• Customer Profitability and Client Modeling
• Recurring Revenue (services)
• Prospect targets and performance measurement for inside sales and cold calling
• New hire success factors
• Commissions paid for value-added services by representative and total

Profitability Metrics (Formula)
• Operating Profit % = Net Income (pre-tax)
• Return on Sales % (Net Income / Sales)
• Gross Margin % (Total Profit / Revenue)
• Product Margin % (Product Cost / Selling Price)
• Service Margin % (Service Costs / Selling Price)
• Return On Assets % (Net Income / Total Assets)

Operational Metrics
• Service revenue as a percentage of total revenue
• Storage revenue as a percent of total revenue
• Material Sales revenue as a percent of total revenue
• Project Sales revenue as a percent of total revenue
• Revenue per Employee
• Profitability by Employee
• Track complaints and/or missed service levels (e.g. Deliveries on time)
• Number of picks per day/week
• Number of picks per warehouse employee
• Number of orders entered per day/week
• Number of orders entered per customer service employee
• Number of put-away’s per day/week
• Number of put-away’s per warehouse employee
• Number of deliveries/pickups per day/week (quantities and stops)
• Number of deliveries/pickups per driver (quantities and stops)
• Average stop time per delivery/pickup
• Average quantities per delivery/pickup
• Review customer satisfaction scores for consistencies
• Service margins on outside service companies, contracts, referrals, or manufacturers
• Service personnel pay and benefits versus competitors/non-competing company

Resource Utilization
• Revenue per employee (efficiency trends) – benchmark to non-competing company
• Operational expense ratio = any operating expense / net sales x 100
• Sales to assets (asset turnover)
• % of time spent on revenue generation versus administration (by role)
• Health insurance cost increase per employee (review costs and alternatives annually)
• Project status performance tracking
• Employee retention (12 month)
• Internal Service Level Agreement performance
• Customer satisfaction percentages (quarterly)

So what are the best practices for dashboards and metrics?  Here are some things to keep in mind:
• Consider the resources required for data collection and reporting. The value should outweigh the cost of creation.
• Spreadsheets can help you to quickly design and define your needs and these may be all you need.
• Chose reporting tools diligently by fitting the system to the information management and data.
• Look for trends.
• Tie certain metrics to performance appraisal (e.g.: against benchmarked non-competing companies)
• Document and modify key processes and best practices toward achieving metrics
• Post key metrics on walls – track progress daily, weekly, monthly or as needed — communicate progress regularly especially including remote employees (as needed)
• Highly target 2-4 metrics or objectives in each business area
• Tie incentives, bonuses, contests, soft and hard recognition directly to metrics performance

There are literally hundreds of potential tracking measurements and you certainly need to be selective.  While there are certainly many products available for dashboards and metrics, spreadsheet management is still in use at many companies for tracking and reporting purposes. With the powerful spreadsheet tools available today, even businesses with limited resources can have much greater flexibility providing the metrics needed to grow profitably.

As a final thought, do concentrate on “profitability” metrics before growth metrics. If you have at least 20 employees, with department managers, you can probably focus on several areas at once. If you are smaller, you should consider concentrating on sales performance and improving service utilization first. Tracking and trending metrics driven by accurate data can serve as a significant decision making criteria as you build your business.