What are the best tools and methods to track and visualize your financial metrics?

1 Define your goals and objectives

The first step of setting your financial KPIs and metrics is to define your goals and objectives. What are you trying to achieve with your business, and how will you measure your success? Your goals and objectives should be specific, measurable, achievable, relevant, and time-bound (SMART). For example, you might want to increase your revenue by 10% in the next quarter, or reduce your operating expenses by 15% in the next year. Once you have your goals and objectives, you can align them with your financial KPIs and metrics.

2 Choose your financial KPIs and metrics

When selecting financial KPIs and metrics to track progress towards goals and objectives, it is important to consider the industry, business model, and strategy. Common KPIs and metrics include revenue, gross profit, net profit, cash flow, return on investment (ROI), customer acquisition cost (CAC), customer lifetime value (CLV), and break-even point. To ensure focus is not diluted, it is recommended to have no more than five KPIs and metrics per goal or objective. Choosing the most relevant and meaningful KPIs and metrics that reflect the value proposition and competitive advantage is essential for success.

3 Set your targets and benchmarks

The third step is to set your targets and benchmarks for your financial KPIs and metrics. Your targets are the specific numbers or percentages that you want to achieve for each KPI or metric, and your benchmarks are the industry standards or best practices that you want to compare yourself with. For example, you might set a target of increasing your revenue by 10% in the next quarter, and a benchmark of the average revenue growth rate of your competitors. Setting your targets and benchmarks will help you evaluate your performance and identify your gaps and opportunities.

4 Monitor and analyze your data

The fourth step is to monitor and analyze your data for your financial KPIs and metrics. You should collect and update your data regularly, preferably on a monthly, weekly, or daily basis, depending on your business cycle and needs. You should also use tools and methods to track and visualize your data, such as spreadsheets, dashboards, charts, graphs, and reports. These tools and methods will help you see the trends, patterns, and insights in your data, and communicate them effectively to your stakeholders. You should also compare your actual results with your targets and benchmarks, and calculate the variances and ratios that indicate your performance.