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Small Business Dashboards Guide | Peachtree | Quickbooks | MYOB

Guide to Small Business Dashboards : What small businesses should keep track of and what are the tools available.

Dashboards are essentially one-screen, customizable computer snapshots comprising charts and tables of your company’s key indicators: sales reports (daily, monthly, year-to-date), cash on hand, profitability, back orders, inventory levels, payroll, accounts receivable and payable, etc. Costs range from about $150 to $1,500 for an off-the-shelf program, but there are also Web-based subscription models that start at about $150 a month.

What is the important information that SMBs should have it at their finger tips?

Ans: Expenses

Expense is the first that needs to be eye-balled frequently. If you have just started your business then revenue and profits come a little later. So keep an eye on your Expenses.

Fig 1.

If you have an established business then a trending expense chart as above gives you a visual clue on how your business is growing. Growing Expense line doesn’t mean its a bad sign. With growth of Expense should follow growth in Revenue and hence profits. Another thing to monitor is the Average Expenses by day

Fig 2.

Using this Expense Gauges, you can don’t need to monitor day to day expenses. Such charts help you stay focused on other important things and occasionaly take a look in detail if the pointer jumps into the yellow or red zone.

Similarly you can keep track of Expenses by whom you pay regularly and the Accounts and categories.

Fig 3.

 

Fig 4.

 

What is the next important thing that you should be monitoring?

Ans: Revenue/Sales/Income (all used interchangbly)

Without sales you fill fall into the charity business. Even the so called Non-profit organizations sell stuff in order to keep going.

Fig 5.

Your slope in sales trend should be greater than your Expense line. Always compare Fig 1. and Fig 2. at the same time to get a perspective on your business.

Similarly keep track of Sales as below

Fig 6.

Love your Customers and more importantly your Top customers

Once you got the basics covered, you can start tracking some of the financial ratios (courtesy: Financial Troubleshooting, by David H. Bangs Jr. and Michael Pellechia.)

Acid Test = Cash and Near Cash ÷ Current Liabilities
Measures ability to meet current debt, a stringent test since it discounts the value of inventories. The rule of thumb is 1-to-1. A lower ratio indicates illiquidity. A higher ratio may imply unused funds.

Current Ratio = Current Assets ÷ Current Liabilities
Another measure of ability to meet current obligations. Less accurate than the acid test for very near term, but probably better a measure for six months to a year out, since it contains receivables and inventories as well as cash and near cash. The rule of thumb is 2-to-1, though this will be affected by seasonality.

Receivables Turnover = Sales ÷ Receivables
Measures the effectiveness of credit and collection policies. If your ratio is going down, collection efforts may be improving, sales may be rising, or receivables are being reduced. If your ratio is going up, sales credit policies may be changing, collection efforts may be flagging, or sales may have taken a nosedive.

Caution: This ratio depends on when receivables are measured and the seasonality of the business. Careful bookkeeping is also essential. The same applies to inventory turnover: Make sure that the measures are comparable from month to month. Use average receivables (inventories) if you can.

Days Receivables = 30 ÷ Receivables Turnover
Another way of looking at receivables. Particularly useful in explaining graphically what changes in credit and collection operations do to a business.

Inventory Turnover = Cost of Goods Sold ÷ Average Inventory
A measure of how well inventory is managed. Most businesses have a steady inventory turn. Compare your figures from year to year, asking yourself what causes the inevitable fluctuations. Small fluctuations are probably due to the flow of work. If you produce one jumbo jet a year, your inventory picture will be very different from that of a dealer of ripe tomatoes.

Days Inventory = 30 ÷ Inventory Turnover
Another way of monitoring inventory. This is controlled by your inventory ordering patterns (among other considerations), so be careful how you interpret it.

Gross Margin Rate = Gross Margin ÷ Sales
Permits comparison of margins over months with dissimilar sales. Ideally, this holds pretty steady in good months and bad — but it depends on your business. It can distort fluctuations if sales are erratic.

Net Profit Rate = Net Profit ÷ Sales
An overall batting average: The aim is consistency over the long haul, not just short-term stardom.

Return on Investment (ROI) = Net Profit ÷ Net Worth
(Note: Net worth might show up on your financial statements as shareholder’s equity.)Another profitability ratio, best looked at occasionally, because it tends to magnify short-term shifts in thinly capitalized companies.

Return on Assets (ROA) = Net Profit ÷ Total Assets
A better profitability measure than ROI. ROA shows how well you’re using your assets. However, since profits are a volatile short-term measure, this should also be taken with a grain of salt. The long-term trend is what matters. A large investment in fixed assets to handle growth will seriously alter this ratio.

All ratios must be taken in context. The reason to look at them on a monthly basis is to make sure that you spot trends as they develop, not afterward. If you are doing something exceedingly well, you need to know it. And if something is wrong, it’s better to find out sooner than later.

Tips & Tactics

• Check to see if your current accounting software has dashboard capability.
• Plan on two to three months to get up and running, both in terms of implementing the software and inputting the data.
• Inquire whether the software you’re considering has different views for different people: CEO, salespeople, bookkeepers, accountants, etc.
• Your dashboard may need to change as your business changes. Make sure your dashboard can grow with you and your business.

Some of the dashboard providers are as follows

• MyBizhomepage: You need to send your financial information to them. We couldn’t get it to work with our various trials.
• VisualCalc : They seem to have a Quickbooks based dashboard
• GSM Dashboards: They have partnered with iDashboards to provide dashboards for Quickbooks. But the software is expensive and is based on annual contract.
• InfoCaptor: You download Dashboard tool on your desktop and we were able to get the dashboard working in 25 minutes from start to finish.

NOTE: If you come across a Dashboard solution for Small Businesses please tell us and we will update this article

 

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