Managing by the (QuickBooks) Numbers

One of the most valuable opportunities QuickBooks® presents to small businesses is the opportunity to manage their enterprise with the help of financial data. Too often, small business owners end up working in their business long and hard hours, without taking the time to manage.

People like this have essentially ‘bought’ themselves a job. A job fraught with risk and responsibility, without realizing the dream of creating something more permanent; a long-term, sustainable business.

It can be difficult learning how to utilize the wealth of information available in an accounting system.  The sheer number of reports available in QuickBooks, the mass of numbers on most of them. How does one cut through the clutter to find the key measurements that really matter?

KPI’s, KRI’s, PI’s, Can We Simplify This?

Probably, yes. The “I” in each of those acronyms stands for “indicator.” Basically, we want to look for those things that can be measured and will make a significant impact on the enterprise that you manage.

What are the key financial happenings in your small business that make it successful (or not successful)?

A labor intensive business might want to measure the cost of labor, including all labor expenses like payroll taxes, health insurance, etc., against sales. A company focused on selling products depends heavily on the margin, the difference between price and cost.

A business with several activities, product sales and service sales for instance, might want to measure over time, how each activity contributed to the profitability of the business.

This kind of information is available in QuickBooks, but it can be difficult to find amidst all the ‘clutter’. The secret to making use of the management opportunities QuickBooks offers is to first decide what key numbers are the most important to watch.

Creating Simple Dashboards

QuickBooks has the capability of exporting reports to Excel. Further, it has the capability to update those Excel reports with more current information from QuickBooks without having to re-format or re-create the Excel spreadsheet.

Here is a Profit and Loss report from QuickBooks, exported into Excel.

P&L Excel

What can we do to make this simpler?

It’s a little work to get started, but once created, our Excel dashboard will update with new QuickBooks numbers and can be used over and over again.

Let’s take a look.

excel dashboard

This is a separate worksheet in the same workbook as the QuickBooks Profit and Loss report shown earlier. All the information on this page pulls from other worksheets that pull from QuickBooks. Nothing in this graphic, once the initial creation is done, is entered manually.

The larger green graph in the upper right part of the dashboard pulls from a Profit and Loss report that totals by month for YTD numbers. Everything else pulls from the Profit and Loss report shown earlier.

The value is easy to see. The business owner examining this dashboard is keying in on the numbers most important to him/her as an aid to managing the business. And, it only takes a few minutes.

This is a very simple example and could certainly be improved by someone willing to spend the time to do it.

Next week: How to update your new dashboard without manual entry.

Hector Garcia, CPA
Certified Advanced QuickBooks ProAdvisor
12401 Orange Drive #136
Davie, FL 33330
954-414-1524
hector@garciacpa.com

Hector Garcia

Hector Garcia

Hector Garcia is a CPA and QuickBooks Consultant.
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