Chris Thomajan: What are my Metrics? How to Build a Management Dashboard
-
Upload
bfbootcamp -
Category
Business
-
view
323 -
download
1
Transcript of Chris Thomajan: What are my Metrics? How to Build a Management Dashboard
CFO Services For Growth Oriented Companies
Part-Time CFO Interim CFO Project CFO● ●
www.techcfo.com
Accelerate the Vision
How to build and use a dashboard
What is a dashboard?
Why does my company need one?
What information should go on a dashboard?
How do I collect the information?
How do I know if the information is correct?
What is a dashboard?
• A short “flash” report of critical data• Answers the question “How are we doing?”• Uses trends and comparisons• Provides high-level analysis
Use to identify areas in which to drill down
Why does my company need one?
• Internal – management team Gives single view of business model Defines and measures specific goals Offers basis for analysis
• Does not replace a detailed variance analysis Provides important feedback loop for forecasting
• External – investors and other third parties Demonstrates understanding of the business Provides objective measures of success Highlights key drivers that may not be in financials
Total
Income
4000 License revenue 3,170,917.99
4001 Services revenue 1,013,422.22
4002 Maintenance revenue 966,831.10
Other revenue 23,544.56
Billable Expense Income 100,980.85
Total Income 5,275,696.72
Expenses
6000 PAYROLL RELATED EXPENSES
6001 SALARIES 513,856.60
6002 PAYROLL TAXES 210,311.35
6003 EMPLOYEE BENEFITS 338,087.93
Total 6000 PAYROLL RELATED EXPENSES 1,062,255.88
6004 BONUS EXPENSE 23,732.68
6006 RECRUITING 115,797.00
6100 CONSULTANTS 481,270.00
6200 CORPORATE LEGAL 107,301.95
6201 PATENT LEGAL 135,355.41
6202 INTELLECTUAL PROPERTY FEES 1,629.00
6220 Content Expense 9,999.97
6300 AUDIT EXPENSE 33,786.00
6370 SOFTWARE EXPENSE 2,467.64
6400 INSURANCE CORPORATE 31,838.97
6490 SALES & MARKETING 1,486.56
6500 TRAVEL 293,033.86
6505 MEALS & ENT 100% 48,821.98
6510 TELEPHONE 29,086.98
6520 NETWORK COMMUNICATIONS 14,372.59
6559 RENT 337,936.16
6560 Payroll Expenses 6,834.21
6601 OFFICE SUPPLIES 45,851.78
6605 REPAIRS & MAINTENANCE 5,940.39
6606 Small Equipment 10,988.68
6607 Equipment Lease 4,436.04
6610 SUBSCRIPTIONS 11,005.60
6620 POSTAGE 8,552.48
6630 SEMINARS & CONFERENCES/EDUCATIO 47,095.98
6640 Advertising/Promotional
6650 PUBLIC RELATIONS 32,580.00
Total 6640 Advertising/Promotional 32,580.00
6700 DEPRECIATION & AMORTIZATION 60,962.82
6750 Bank Charges 338.76
6999 Cost of Labor 3,312,956.00
Total Expenses 6,277,715.37
Net Operating Income (1,002,018.65)
Other Income
7000 INTEREST INCOME 27,848.40
Total Other Income 27,848.40
Other Expenses
6900 TAXES FRANCHISE 3,247.86
6905 INCOME TAXES - STATE 456.00
7001 INTEREST EXPENSE 215,959.49
Total Other Expenses 219,663.35
Net Other Income (191,814.95)
Net Income (1,193,833.60)
COMPANY, Inc.Profit & Loss
January - December 2010
Company, Inc. – Management Dashboard January 2011
2011 2010 Monthly Actual$s ('000s) Average Jan Status Status
Cash Balance $2,744 $1,948 $350k in A/R slipped to FebYTD Net Burn $46 $796 Higher legal, consulting costs
YTD Bookings $709 $550 Tracking to budgetYTD Revenue $851 $625 Tracking to budgetYTD Income/(Loss) $25 ($101) Below budget because of higher costsEBITDA $45.00 ($72) Below budget because of higher costs
Headcount 27 30 Tracking to budgetRevenue per employee (annualized) $262 $250 $250k is target
Realizable UtilizationFTEs on projects 129.9 13.2Available resources 173.4 18.1Realizable Utilization % 74.9% 72.9% 3 new hires being trained in Jan
Company, Inc. – Management Dashboard January 2011
What information should go on my dashboard?
• Keep it concise – not the only report used• What are the 5 to 10 key performance
indicators (“KPI”s)? Focus on cash and cash management Top line drivers
• Bookings, revenue, renewals, attrition Cost drivers
• Headcount, Cost of Goods sold, consultants Financial metrics
• Revenue per employee, Quick Ratio, Cash burn Milestones
How do I collect the information?
• Agree as a management team on the metrics• Use systems to capture relevant information
Accounting software CRM – Salesforce.com Project management software
• Benchmarking is key – don’t be afraid to guesstimate!
• Walk before you run
How do I know if the information is correct?
• Consistency is key• Use industry reports• Build a list of comparables• http://www.forentrepreneurs.com/designing-sta
rtup-metrics-to-drive-successful-behavior/
Case Study – Software NewCo
• Seed funded• Early revenues – license, services & maintenance• 15 people
6 R&D 3 Services 2 Sales 1 Support 3 G&A
Cash is (still) king• Cash balance against forecast
Status of collections (DSO) Why the variance? What are trends? What’s plan B?
• Cash burn Gross burn versus net burn What are key contributors to burn? What are the levers available to manage burn?
• 80:20 rule
• Quick ratio (Current Assets – Current Liabilities)• Financing options
Debt, equity, vendor financing
Revenue drivers
• Bookings• Average selling price (“ASP”)
Total bookings / # of deals
• Number of units Sites, seats
• Sales efficiency Bookings per rep Cost per rep
• Attrition• Revenue per employee – the magic number
Cost drivers
• Lead generation – cost per lead What’s a lead? Need to crisply define.
• Cost by department Support
• Number of calls/inquiries• Status report
Overhead R&D – what are trends? Utilization – when are we profitable?
1770 Mass Ave, Suite 150Cambridge MA 02140
Telephone: (617) 823-4289E-mail: [email protected]
TechCFO is Part of Your Team