As a company grows, the business owner quickly passes the point of being able to keep important data in their head. Not only does the sheer volume of data increase, but also its complexity, since the data is generated by increasingly complex business operations. Thus, the need for data dashboards—at-a-glance data on major trends gleaned from disparate systems—becomes more acute. While data dashboards do not replace good financial reporting or regular financial review and analysis, they are a valuable tool any business can use to be more strategic in its decision making. Decisions such as hiring and firing, shutting down a line of business, or starting a new one can all be aided by an effective use and visualization of data.
We recently developed and built a dashboard for a business owner that gave her access to critical sales and performance data on a team and individual basis—insight she simply was not getting from her accounting system alone. Utilizing a free online tool, we engaged our client in an iterative process to develop the critical data points and visuals necessary for tracking sales and market trends. We also worked with the individual salespeople, who up to this point were collecting their own data, to ensure that the data were meaningful to them. We also developed different views of the data—one for the company’s owner and one for the sales team (customized for individual members).
If you are considering developing a data dashboard of your own, our best piece of advice is to be sure you are working with someone who understands data and databases, and equally important, understands how to automate data collection. As in the case of our client, she didn’t need to spend a ton of money to obtain something incredibly useful, but she did need our expertise to build the actual dashboard and to train staff in using and maintaining it. Since all businesses are different, be sure whomever you work with first takes the time to understand what you do and what you are trying to measure. That said, there are some general lessons to keep in mind.
Focus on the Possible for Your First Dashboard Version.
If your operations are running smoothly and you’ve got reliable financial statements—and now you want to be strategic and grow—a data dashboard is a great way to frame the key questions you have about the business and want to pay attention to regularly. Where to begin? Start with what is easy and possible. We can’t stress this enough! It doesn’t help to spend time conceiving of a bunch of data points, if the reality is that they can’t be generated by the systems or data you keep, or they will require a ton of manual manipulation and data entry to produce. Think about how you might frame your key questions to utilize the data that you can easily obtain, and adapt as needed to find the right compromise between possible and useful. (This process may lead to plans to capture data differently in future, to make it more useful to management. You can update your dashboard once you’ve collected the new data for a while.)
Don’t Overextend Yourself.
We are all familiar with the classic management adage “what’s measured is managed” (Peter Drucker). As business owners, you don’t want to micromanage every little thing. Rather, you want to decide what you’re going to manage and then you want to have the metric for it and pay attention to it. The same is true for data dashboards; you can’t have a chart for every little thing. Pick the key things that need to be tracked. Ultimately, you don’t want to create a dashboard that’s so complicated that you don’t really pay attention to it. We are not suggesting creating a dumbed-down version of your data but rather that your dashboard is a clear and concise view of your most important metrics.
Once you’ve decided what charts you need, it’s time to build the dashboard. Ideally, your dashboards will be as automated as possible. If the dashboard is incredibly complicated to put together, the backend becomes outdated, or the data are not consistently and regularly updated as needed, the dashboard will not work correctly and people will stop using it. So the technical design should be as straightforward as possible. Having an experienced consultant review your plans, help you finalize them, and then build the dashboard can really be worth the investment. Make sure the dashboard builder creates clear documentation of the technical design, how to update the charts, and how to update/refresh the data. Then have the builder train whoever will maintain the dashboard and the data refresh. Remember that you will need to budget time or money, not only to create the dashboard, but also to maintain it as your data collection systems and your metrics inevitably change.
Present Data in the Right Context.
As a business owner, you also want to ensure that data are presented in such a way that it helps people use it intelligently in decision making. For example, if you design your dashboard to present a week’s worth of data, people will be inclined to over-react to the short-term trend, rather than seeing that trend in the context of the longer term. In general, dashboards should help people see trends over time. The current state of your business, seen in the context of the short- and long-term trends, will give you and your managers good information for decisions. Remember, though, that data are just indicators. The dashboard is a starting point that shows you where to investigate further. Think of the dashboard as your “early warning system” so that you notice subtle trends before they become big issues, good or bad. That way you can take advantage of good trends early on, and also nip problems in the bud, leading to smoother progress forward and a more successful business overall.