One of the biggest reasons why companies fail is because business owners don't know their numbers. Now, if this is you, no shame, no harm, no foul, just don't stay stuck here. You don't have to be a nerd doing all these debits and credits and knowing the tax code in order to know your numbers.
You just have to understand some very basic things and it starts with having the right tools. When I was first starting out in business, I had these dirty spreadsheets, okay? They were nasty looking because they had all these columns and all these rows and all this data. And then I tried to build a KPI dashboard in Excel.
And I could tell you at first, I thought it was so cool. It was like rainbow bright. Some graphs were green, blue, yellow, purple. I mean, it is terrible when I look back on it. But nonetheless, it served the purpose for a time. But then what happened is my dashboard started to break because for one, I would go in there and fat finger something and boom, I'd get a pound ref in my Excel spreadsheet.
If you've ever gotten the infamous pound ref, you know what I'm talking about. It blows up your formulas basically. And that would happen. Then all of a sudden, I'd have to go in and fix things. Or I would go to share the spreadsheet with one of my colleagues and I'd be like, all right, send them an email, see the attached. And then I'm like, oh, dang it, I forgot to update April.
So then I'd send them another email and say, disregard the last Excel file I sent you, use this one instead. And then they would make some changes on their end and send it back and be like, here's the updated version. I found an error in row three.
And then I'm like, okay, which version is correct? And we had all these versioning issues. And that's a major problem. So now what I want to do is when I create these videos, I want to show you more of the tools that I'm using to run both my business and the businesses that we work with.
Okay. So this is a KPI dashboard. You'll notice it's much cleaner, right? So it's much smoother and there are colors on here. So I know which things are green on track, which things are yellow off track and which things are red, like danger zone. But the key here is having a KPI dashboard where you can go in and see in real time how you're performing in each of these areas. Now, if you don't have a KPI dashboard, it's okay.
Like I said, just don't stay stuck here. That was me for years. And I was missing out in my business in so many different ways.
Now, some people are like, I need a KPI dashboard, which KPIs do I track? So they go to chat, GBT, they type in a few things. And then next thing you know, they have a list of 20 KPIs. So they're just measuring a bunch of random things and that's okay.
Right. To get started, but it can create a lot of confusion. If you've ever tried this with chat, GBT, you prompt it and it gives you an answer.
And you're like, wow, that feels like exactly what I was thinking. Then you prompt it again. And then it gives you a different response.
And you're like, wait, you just gave me 20 KPIs. Now you're giving me different KPIs. Which one is it? And then you get into this fog and you're utterly confused.
So when it comes to KPIs, you have to know how KPIs relate back to cashflow. That's the key. Otherwise you're just measuring a bunch of random things.
I was working with a company a while back and I looked at their KPI dashboard and they had a great start, but they were measuring things all over the place. So when I said, all right, what do you look at on this KPI dashboard to help you make better decisions? And then how do you change behavior based on these numbers? And the leader was like, well, I don't know. I mean, I just look at it and I pass it along, but yeah, I mean, we're not really using it in the way that we should.
And that's where a lot of people struggle. And that goes back to this dashboard. I have this on my phone.
I have it on my tablet and I'm looking at these numbers all the time. And then I'm asking myself, okay, based on this, my cost of goods sold percentage is going up. What are the levers I can pull to improve it? Or my return on invested capital is yellow.
It used to be green. What's going on in my business? What's impacting this? And what are the levers I could go pull in my company? And that's why having a KPI dashboard is a good start, but then also being able to identify the right actions to take to influence the numbers is really a key skill to develop. And that's what I talk about all the time, but I wanted to show you what a KPI dashboard looks like and how I use this in my business.
There are a lot of tools out there. We have our own proprietary KPI dashboard that we use in our companies to manage their performance, but there are other KPI dashboards out there as well. The key is, is just having a simple dashboard with everything in one place with indicators.
So you know what's on track and what's off track. And then more importantly, knowing how to influence the KPIs to drive better performance in your company. All right.
If you want to talk at all about your business, we can always hop on that free strategy call. It's a 20 minute call, and you can book that by going to coltivar.com. And until next time, take care of yourself. Cheers.
