In the third part of my little Christmas mini-series on the Business of Dentistry, I wanted to explain the concept of the financial dashboard.
Firstly, before you understand this, you must know that I am rubbish with money in all aspects.
From early on, owning a business back in 2009/10, I was just trying to learn the ropes about where I was and not letting the business go bankrupt.
I understood the most significant gaps in my knowledge and motivation and just general attention span related to financial matters more than anything else.
I have always been much more indifferent to that side of things than many other people I meet, and that is a very dangerous thing in business, where you must be absolutely clear on your financial situation as often and as regularly as possible.
It was really working with Chris Barrow, which underpinned the necessity for me to pay close attention to the finances and have the maximum amount of help I could.
I had a good accountant from early on, but that's not what works in management finance.
What works in management finance is the production of your own numbers and, more importantly, getting someone else to produce the numbers for you from within your business.
The reason that this is important is that number collection is massively emotional. If you are the person who collects the numbers and inputs the numbers, you're looking at them in real-time on a day-by-day basis, and it's hard to become detached, and god knows we all need to be detached from financial matters in our business.
The reason we need detachment is that it takes weeks, months or years for your decisions to have an entirely positive impact on your business. Still, if you're trying to change the course of your boat every day, looking at the numbers at five o'clock and then coming in with something else to do the next day, it's exhausting for you and everyone and the business itself.
The solution to this is the dashboard.
Number collection is pretty much useless. It's insight into the numbers which provide value, growth, sustainability and excellence in your business.
For that reason, it's essential to understand that the further our businesses move on, the more critical it is to get someone to produce those numbers for us and to look at them on a regular (but not too regular) basis.
Designing your dashboard and what numbers are important to you is also crucially important.
Paralysis by analysis and over-analysis of numbers in any aspect is ridiculous and a time-wasting contradictory exercise.
Insight into understanding your key performance indicators, why they are what they are, and where they live is one of the most important things for running a successful business.
It is impossible to set all of this up without understanding what your business is there for and where it's going over the next three years.
It's also impossible to run a successful business by just stealing all the profit out of the business at the end of each month and thinking that that belongs to you when, in fact, it belongs to the business.
Once you've thought of all these things and you've managed to set up what you believe your key performance indicators are, then really, as the business owner and chairperson of your business, you shouldn't really pay any attention to that more than once a month.
That will sound ridiculous to our managing director, Hayley Brown, if she reads this because she knows that during the whole of the Covid era, I would check the numbers twice a day because I was absolutely addicted to seeing whether we were going to survive or not.
The problem with this is that you cannot make any long-term decisions when someone has a loaded gun in your mouth. So, detachment from the numbers is one of the greatest skills that I have had to develop over time of running a business to understand that the decisions I make today may not have any effect on the business until six months from now.
Your dashboard is your lifeline.
Remember that profit is like oxygen to your business; it's not the meaning of life, but it is essential for life.
If you are not making a profit, you need to understand why and make changes over the long term to make it better.
For me, the dashboard is the greatest tool you can possibly imagine for that purpose,
Blog Post Number - 3668
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