Similar to a car’s dashboard which indicates the car’s performance and health, a business dashboard is a set of metrics used to assess the business performance from different aspects. It provides a more comprehensive view of the health of your business than simply looking at financial performance. In addition, a dashboard can provide you with advance signals of expected future performance and health. If the only business performance metrics you examine regularly, are sales and bottom line profits, your view of the health of the business is limited. It is essentially similar to driving a car by looking only at your rear view mirrors.
The process of setting up a dashboard, using a set of balanced metrics, starts with the business strategic planning process. It emphasises the importance of selecting both outcome metrics (for example: sales, profit) as well as a few leading indicators (for example: number of active contracts, new registered customers). The leading indicators are particularly helpful in signalling the future health of the business and are different from one business to another. In addition, a solid dashboard would normally include non-financial metrics that are equally important for the business (for example: performance of internal processes, organisational metrics).
Finally, a regular review process is needed in order to benefit the most from your dashboard.