So you have run your business “by the seat of your pants?” Well done.
But with today’s challenges you know you need to make better decisions in order to keep up with the play. Also, you want to be confident that your decisions are based on facts right for your business.
Maybe you need to start “Dashboarding!”
No! Dashboarding is not some new water sport or interrogation technique. It is simply keeping a record on a month to month basis of the key numbers in your business – numbers that you can easily utilise to plan your future with a degree of confidence.
If your business doesn’t have a dashboard, then you are reliant on your immediate gut feel, or on copying what others are doing. Moreover, your accountant’s end of financial year results, while accurate, are not really helpful for making day-to-day decisions. Have you ever meet a builder who consults annual accounts on a daily basis?
To convince you to keep better records I outline five reasons why I teach (some might say, compel, coerce, bulldoze even) all our clients to become proficient at dashboarding.
1. Gives an Objective View
The old proverb “you can’t see the wood for the trees” tells us that when we get really involved in the detail of a situation, we easily lose sight of the bigger picture. Without that bigger picture we may be governed by our own opinions and feelings – opinions and feelings that we may believe are the only truth! This can be dangerous.
But the good news is that we can overcome this danger by dashboarding. It gives us the actual facts about our business performance. Then armed with these we can go to work and make much better decisions about future actions.
2. Measures Trends
Whether you like it or not, you live in the moment – it’s the only time you have. And sometimes the emotions of that moment colour the interpretation of everything else – past and present – and push you to a wrong conclusion or to making a poor decision.
For example a builder I know, facing some immediate pressures, contemplated quitting the business. Right at that moment it seemed to be making no headway at all. In fact a job was performing poorly. However, after a careful comparison of the key business indicators, comparing the quarter with the same quarter last year, we discovered that his turnover had actually more than doubled and the net profit had increased seven times! Overall the business was moving in the right direction.
Admittedly it was from a low start, but the trends were clear. Everything he had been doing was now beginning to bear fruit – it just needed a little more time to become obvious – in spite of some ups and downs.
The thing is, when you keep records you are able to track small movements of important ratios and numbers over longer periods (say 3 months). Reading these trends gives you assurance that you are on the right track. Or not!
3. Gives Early Feedback
You really want to know if a new initiative is working as soon as possible. You want to know that it is working for you rather than against you.
For example, if you trialed a scheduling process on a job and it worked okay and the team liked it, you might be tempted to run it out to all your jobs. But if careful analysis of the results showed that the job ran a little behind schedule and a little over budget, you would probably want to test another process, or at least trial it again. Certainly if you did go ahead and roll out the process, without knowing the impact or without amending it, your business would gradually lose profit and maybe eventually fail.
Dashboarding can give you that specific information early – so you can quit or amend before it is too late, or implement with confidence.
4. Identifies Intervention
There are plenty of people “out there” who are very happy to tell you what you need to make your business fly. Market more. Sell more. Buy my system. Use my tools. etc. Great general information and all useful – at the right time and in the right place. But there is no possible way it is all relevant – now!
Imagine if every time you put your truck in for a service your well meaning mechanic overhauled the engine, replaced the gearbox and fitted new tyres, just because new ones are great to have! Well meaning, but inappropriate!
Careful dashboarding can help point out areas in your business where you are weak, or where you have a particular pressure point. If you know this, then you are able to cut through all the “advice” and focus on the things your business needs now.
For example, a builder having trouble paying her bills, starts dashboarding and discovers that everything is fine except that her gross margin is 10% – just a little less than her overheads at 11%. She does not need more clients or sales. She needs to price better, and/or get her team working more efficiently. Focusing on more sales could just make the loss even bigger.
Never prescribe without diagnosis.
5. Compels Responsibility
Building businesses can put large amounts of cash through their bank accounts. The numbers can be eye watering. But the bank account does not paint a true picture of the actual state of the business. To make matters worse, when there is cash in the account, it is tempting to splash out on new equipment, vehicles and toys – only to discover it is not sustainable! Everyone knows stories where this has happened!
But when you get into the habit of checking your dashboard regularly (at least monthly), rather than just the bank account, you are informed of the actual performance of your business – not your imagined performance. You will be able to anticipate tax payments, future staff requirements, cash flow pressures, and be better prepared to act now for better stability in the future.
P.S. Whenever you’re ready….here are 4 ways I can help you grow your building business:
1. Grab a copy of my free book
It’s a road map of a successful 15 minute sales call that’s guaranteed to increase your conversion rate. http://thesuccessfulbuilder.com/book-15-min-sales-call/
2. Join Trade Mates and connect with builders who are scaling too.
It’s our new Facebook community where smart builders learn to get more income, time and freedom. View our free business resources for builders. Ask questions of like minded business owners and business coaches. Give your knowledge and expertise to help others. – https://www.facebook.com/groups/TradeMates/
3. Join my new group
I’m looking for about 8 builders who want to earn $250K+, want to work 40hrs/week, and run their business rather than work in their business. If this sounds like you, message me at firstname.lastname@example.org and put the words, “New Group”, in the subject, and I’ll get you more information.
4. Join Loft Members
If you’d like help to get off the tools, make more money and get your life back…just message me at email@example.com and put “LOFT MEMBERS” in the subject…tell me a little about your business and I’ll get you all the details.