Optimum - Cockpit Example

Visualizing Your Financial Data

Now that you have all of this important data, let’s turn it into useful reports and dashboards that tell a story about what is happening in the business. A visual story will help you assess the current market value of your company and identify the best areas to improve in order to increase the market value of your company. Together, market analysis and KPI’s will paint a picture that both illustrates where you can improve internally and how much potential for growth awaits your business.

Follow the links to see an overview of which Key Performance Indicators investors are going to focus on when valuating your business and an introduction to analyzing your market.

Making the data accessible to everybody within your organization will go a long ways for making improvements. By keeping updated models of the data you track, you’ll have your entire team aware of the direction the company needs to go in. This sets the table for defining roles and setting individual goals.

So what is the picture we’re trying to build, exactly? Lets take a moment to refocus on what exactly our end goals are with this data. We want to:

  1. Understand the current market value of your business, in a way that you can communicate to investors
  2. Identify the areas for improvement that offer the greatest return for your daily/monthly operations
  3. Identify the areas for improvement that offer the greatest return in terms of appreciating the market value of your business

When it comes to actually modeling the data, you’ll want to tell a story. Based on this story, you’ll want to generate projections. What you’ll end up with is a story with four essential parts: history, present, projections, and goals based on those projections. As times goes on, you’ll get a better idea of how attainable your goals are. With that, you’ll have a clear standard to measure the effectiveness of the changes you implement.

Key Performance Indicators

You don’t necessarily have to cover every single KPI that seems relevant, at least not to begin with. Start with a handful (at least 5) that you sense are going to have the biggest impact on your business. As you get systems for the most important ones dialed in, you can start to track other KPI’s to enrich the picture.

The more specific you can be, the better. An excellent resource that you already have in-house is your financial data: show your income, show your operating costs, show your margin. You’ll need to have various categories for your finances, like finance by region, finance by demographics, etc.

Improve this process by attaching more details to each transaction. Most companies already track individual sales in some capacity; make the data more accessible, more digestible, and more meaningful. Cover specifics like who the customer is, transaction date, transaction amount, the product/service purchased. Attach demographics such as consumer age group, location and company size. Then, of course, you’ll want to see what you can learn from individual accounts. Track their history, their current projections, and the goal for each.

Ultimately, the intent is to juxtapose costs and sales against each other. See where you can reduce the former and increase the latter. You’ll want to quantify the cost of production, sales, and marketing, then break these down into sub categories like cost-per-lead, cost-per-sale and customer retention. Click here for an overview of specific KPI’s.

Remember, once you’ve identified your categories, you’ll need to display history, present (Month-to-date/week-to-date), current projections, and targets. Try using maps wherever it makes sense. Demographics can be represented with pie charts or bar charts. Keep in mind that visual representations are easily comprehended and retained, especially once the viewer becomes familiar with what they represent.

Market analysis

To truly measure and attain your company’s potential, you also need to understand what other opportunities await you outside of your operation and your current customer base. Hone in on the best areas to tackle by displaying market analysis.

Maps will come in handy when it comes to displaying your serviceable area and its sub categories. Pie charts and bar charts are useful in targeting demographics and other categories, such as market share. Here are a few categories you can track and display:

  • Total market vs serviceable market
  • Saturation of market, and how much room there is for new players
  • Ease of entry into said market(s)
  • The share of the market you currently control
  • Competitors currently in the market and coming to market soon
  • Strengths/weaknesses of competitors (brand, pricing, offerings, etc)
  • Your ability to compete in the market (and in sub categories such as age group) and win share
  • Overall go-to-market strategy and alignment with target customer buying habits (plus amount of success, regardless of theoretical alignment)
  • Pricing model and alignment with buyer’s willingness to pay
  • Price vs method to buy (online, in person, sales rep)
  • Impact of a more mature marketing & sales engine to accelerate sales, plus potential for cross sell, or penetrate target customers

Tools for building visualizations

A couple of excellent tools for getting started with building visuals are Excel and PowerPoint. The learning curve is low and files are easy to share and collaborate on. As you become more advanced in your visualization needs and as your company scales, a tool like Tableau is a great option (and a local Seattle success story as well).

Sharing your story

For publishing the data internally we suggest building a “company cockpit.” It can be prepared with any of the tools noted above and should be shared via a screen in a central office location, an internal site or by just emailing to everyone. The key is to make it easily available and push it to people or look at it at a regular meeting; don’t ask people to remember to check it on their own because most will forget.

Tracking these help you and our team arrive at conclusions about your positioning within your market, so you can deduce where the best opportunities are waiting for you. If you can identify internal opportunities to reduce costs or improve effectiveness, and these also help you capitalize on external growth opportunities, you have an obvious place to start. If your whole team is constantly being exposed to a comprehensive breakdown, the result will be an abundance of ideas about how to pursue your goals.

Just as importantly, you’ll be familiar with an array of metrics that quantify the value of your business. When you meet with investors, you’ll be able to speak their language. You’ll also have a detailed history and large body of data to refer to. This will help you pinpoint the best asking price, and give you credibility in the eyes of the prospective buyer. Knowing what investors are looking for will help you not just at the negotiating table, but also in the time between now and then as you craft your business into one of great value to a buyer.

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