Data is everywhere and a financial dashboard has become an essential tool for startup teams.
It’s not just personal data – businesses create mountains of data every minute of every day. Financial data, production data, customer data, the list goes on and on.
As a founder, you don’t need raw data. You need a dashboard.
Until it’s condensed and aggregated, most of that information is useless as a basis for decision-making.
A financial dashboard gives you a customizable, real-time executive summary so you can quickly scan key metrics.
Creating a great dashboard is all about what you put into it.
Choosing the Right Metrics
Financial data serves several essential purposes. But internally, it’s mainly used for internal decision-making.
When creating a dashboard, carefully select the info you want to see. You may have millions of data points available, but too much information will complicate your message.
Choose metrics for your dashboards that closely align with your company’s key objectives. Putting critical information at your fingertips will help you make better, faster decisions as a founder.
Burn Rate
From early-stage startups to mature companies, cash is king. Running out of cash can spell the end of your business at any phase.
Burn rate is the measure of how quickly you’re consuming cash. Measured monthly, it’s the sum of all funds coming into and going out of the business.
Cash on Hand
A section of your dashboard devoted to this key metric gives you a quick check of how much cash the company has in the bank.
Runway
Dividing cash on hand by your monthly burn rate shows your startup’s runway (in months). This is the amount of time you have to reach break-even before running out of money.
Including these cash metrics in your dashboard keeps your finger on your business’s pulse.
Sales & Revenue Comparisons
Because sales are both an indicator of financial health and a signal from the market, sales and revenue comparisons are essential dashboard metrics.
You can compare with the previous month, or the same time last year. Many organizations also measure against the targets they set for themselves in the annual sales plan.
Knowing at a glance whether or not you’re on track enables the management team to make adjustments on the fly.
Payroll Goals
For most businesses, payroll is a significant expense driver.
But it’s also a key sales and operations driver. You need a growing team to develop products and service an increasing customer base.
If you’ve set a goal for your team’s size, monitoring your payroll growth is a good check.
Key Cost of Goods Sold (COGS)
Next to payroll and taxes, COGS is another significant business expense. Including it in your dashboard ensures it’s never out of sight for too long.
Non-financial Metrics
Depending on your particular business, there are also a host of non-financial metrics closely linked to your startup’s financial health.
Things like:
- Average Customer Acquisition Cost
- Monthly Churn in %
- Customer Lifetime Value
- Average monthly users
Choosing the Right Dashboarding Solution
We’ve established the importance of building a dashboard. But putting it together on your own isn’t so easy.
Fortunately, there are a lot of great tools available.
Here are a few key aspects to consider when choosing a dashboarding solution. You’ll likely need to decide which features are most important and which are merely nice-to-haves.
Ease of Integrating All Your Data
Many solutions can link seamlessly with your existing systems. Typically, choosing a tool that can integrate quickly and easily means lower implementation costs.
Customizability and Collaboration
Assuming you’re not running a one-person show, you want to share your data and dashboards with the rest of the team.
Many users also mean different audiences with a variety of needs. The finance team will focus on alternate metrics than the operations or marketing teams.
Choose a solution that’s flexible enough to let users customize their dashboards.
However, a widely-used tool also needs excellent user management. Not everyone needs (or should be able) to see everything.
Especially as the team grows, you need to ensure that sensitive data can be protected by easy user access rights management.
Reliability and Data Security
Many dashboarding tools are shifting from on-premise hosting to cloud-based. While both have pros and cons, you can access cloud-based tools anywhere you have an internet connection.
Accessing your data and financial dashboard means relying on the partner (and your internet connection).
Further, because you’re transferring sensitive data over the internet, you need to ensure that the vendor will keep your data safe.
Cloud can be just as secure as on-premise hosting. But, find out what their security looks like and how they eliminate risk for their clients.
Choosing an Expert for Implementation
Financial dashboarding is about helping you make better decisions for your business.
Dashboards are an excellent way to give your team easy access to your company’s financial health at a glance. If something’s not right, you’re better off knowing as quickly as possible to enact countermeasures.
But you’ll need an expert partner to help you implement a dashboarding solution. Founder’s CPA understands tech and fast-moving startups, and we’re perfectly equipped to help get your dashboarding solution off the ground.
Contact our experts for a free consultation on implementing a dashboard solution at your startup.
