I opened a recent article written for Utah CEO Magazine with a story about two busy entrepreneurs, each trying to manage a busy schedule and maintain a sound financial perspective. One is trying to keep up, and the other uses a financial dashboard to keep an eye on things. Here’s the scenario in part one of a four part series of posts:
The busy entrepreneur sits at his desk reviewing the January financial statements. It is the 15th of February and he is somewhat frustrated that the reports are so difficult to understand. He knows that they may contain critical information but he has neither the time to research nor the competence to properly analyze it to make it more meaningful. After 30 minutes of reviewing key accounts, he files the financial statements in his 2010 binder and moves on to another important project, fearful that he might be missing something important about his business but hopeful that he is not.
Contrast our first executive with the CEO who arrives at his office at 7:30 AM on Monday morning, opens an e-mail from his Controller and finds last week’s dashboard – a collection of the Company’s key operational and financial measurements in an easy to read graphic format with a one paragraph analysis and explanation from his finance team. In the same 30 minutes, this CEO reviews a high-level overview of the Company’s sales, costs, productivity and financial highlights.
In the process, as he notes some concerning production information, a quick telephone call informs him that the Manufacturing Supervisor, after seeing the same information, researched the problem and has a list of recommendations in order to remedy the situation so that the same results do not happen this week. The CEO approves the Manager’s plan and leaves his office to conduct a staff meeting, confident that he is making good decisions with the information available to him.
If you own or manage a business, you undoubtedly want to operate like the second example but implementing effective dashboards or timely and accurate reporting is easier said than done.
In the next post of my four-part series I’ll quickly review how to set up your financial dashboard. In the meantime, if you have questions about how to better manage your business’ financials, don’t wait for the next post: Give us a call right away.