5 Steps to Your Business Health Check and Killer Dashboard: Step 4

What does the next 12 months look like? An intro to Scenarios & the power of a Dashboard that looks ahead

Written by Hannah Dawson

You’re hopefully already having “Ah-got it” moments. As a heads up, Step 4 appears long-winded, it is not, we’ve just been descriptive. Your final step 5 is so easy you are 100 yards from the finish line after completing this step 4…

The third card needs a forecast. So you are going to create one!

You’ll get a feel for scenarios and how easy it is to create one, by using ‘Last Year’s Actuals’ version. This will take 10 seconds for the settings and 5 seconds to create. Ready?

  1. Head to the Forecasts area (left navigation bar, under Boards)
  2. Find your organisation, and hit New
  3. Enter the Settings – you can change the tax settings later, so just find and match your account’s payable, account’s receivable and your main bank account – Hit save (10 seconds)
  4. Hit New again, and then click, Last year’s Actuals and  “Quick create“, enter a name and hit Build (5 seconds)

Last year's actuals scenario

Now you have a 2-year forecast based on last years actuals, which means that if you change nothing in the business, and repeat the same Revenue and Expenditure patterns that have happened over the previous 12 months, this is what the affect on your current cash will be. Focus on the bank (cash) line on the chart.

Is it going up? (amazing!), flatlining? (does the business need a shake up in some way?), or falling off a cliff? You have just given yourself huge insight into your business’ future in a few seconds. Now of course, you’re not going to take this forecast to the bank, but it’s an awesome illustration.

While you’re here, you’re going to make another scenario (this is important).
Exit the scenario you’ve made (Back button), hit New again and this time Last Year’s Actuals > Advanced Create.

Advanced LYA settings
From the top to the bottom:

  • Enter a name
  • Toggle the Every account category off, as above
  • Enter the number that appeared in your average figure for customer payment days, in the credit terms for Income (200 in this image)
  • Then, in the two fields below, enter the amount of days it takes you to pay your suppliers. These are separated into Cost of Sales (the expenses you have to pay for that create the items you sell) and Expenses (anything else that you have to pay for to keep the business running). Hit Build

Your cash graph will now be different than the first one (and more realistic). If your Revenue credit terms are longer than your expenditure credit terms, you are going to run out of cash, so be honest, it’s better to know. We cover how to build a real forecast in these guides, but let’s stick with the Killer Dashboard for now. Head back to your Board.

Note: When you do go back to your boards, the first one we gave you may well be there in your Killer Dashboard’s place. You can find your Killer dashboard, by hitting the Board list or by using the search facility as seen below:

 

What does the end of the year look like?

The power of Futrli is the combination of today and tomorrow in one place. We now have 2 scenarios for us play with.

Add another Report
Rename it: 
Heading: End of Year. Sub-heading: What does it look like?

Settings tab > Forecast & Actual > Last calendar month > & the following 11 months

Report tab > Income is already present, now click on New Formula and when the box appears use the search field and start to type Net Income (select it when it appears in the search, then slick OK to add it) and do the same for Net Cashflow.

Next, search for the Bank Accounts (category) and select it. This will being up a further data selection box. From the dropdown Use the dataset, select Cumulative, and when selected choose the following to get the cumulated revenue picture from the start of the report.

 

Display choices:

Below is a quick illustration of how you can change the way you display your results. Simply click the Chart Options icon, and select your chosen graph or chart type.

 

Advanced choices:

Under the Columns tab, you can select some of the more advanced information you might want to see in your chart, depending on what internal KPIs you want to measure in an individual chart.

 

And you’re done!

 

Interpreting the results – I love this part!

Now you play with the data.

All 5 metrics will be on your chart. (Pop this image into a new tab by hitting it to make it bigger). You can also select ‘Presentation Mode‘, you’ll find it in the Board navigation near where you ‘Add Card’

LYA report card
#KPI 1 Revenue over the next 12 months

Hit the Bank account, Net Income and Net Cash Flow legends under the chart. This will give you a clear picture over your predicted revenue. The first month is actual data and this month onwards is forecast data. You now have a view over your predicted turnover total for the next 12 months. This report can be made even better by making the start date of the report the first month in this financial year, and then you get your predicted year-end for this financial year (do this by choosing custom where you have selected last month and pin the date to the end of said month, e.g. choose the 31st March not the 1st March).
The best companies in the world have a hockey stick curve in the cumulative income line, something we are all gunning for!

#KPI 2 Net Income

How much profit are you going to make? This won’t ensure the success of your business, but it’s a hugely important KPI for you to forecast. Profit breakeven if you aren’t there yet, is your first milestone to try to smash.

#KPI 3 Net Cashflow

Time to change the chart type. Flip the card over (by hitting the cog in the top right) and in the Report tab, use the chart icon to change the chart to a Bar. This is great for really highlighting KPIs that you DO NOT want to to be below 0. Net cash flow breakeven and its pattern into the future, is probably the most important metric to have a handle on for any new business. If it is sub-zero for periods on end, cash may become an issue, so be prepared.

Net cashflow
#4 Bank Accounts AKA your cash

I know this is not an accurate forecast, but it’s a good start in highlighting potential successes or areas of concern. It’s no good being profitable if in fact you have a lot of expenditure on your Balance Sheet, such as equipment or loan servicing, which doesn’t appear in your P&L. It’s also no good using Xero or QBO etc for budgets as they are P&L focussed only and don’t take things like GST/VAT into consideration. You want to know if you have $50,000 in GST to pay next month that you haven’t put aside.
Monitoring your cash and creating a forecast that is updated (quickly and easily!) every week, helps you to sleep at night. Even if you have some tricky months ahead, a forecast can help you build the plan to get your business out of a hole. EVERY business should be working like this: it’s not traditional, but now technology such as Futrli does the heavy lifting.

Next
Step 5 (the final one): Which future is best for my business? Choosing which scenario should become your live business plan is easy.

Previous
Step 3: Getting a grip on your customers & whether you are a bank for them with our Report Cards