For busy startup CEOs, who are often pressed for time and need to react quickly to company performance changes, financial tables can prove to be an ineffective and tedious tool for understanding key performance indicators (KPIs). Visual layout tools like charts and graphs enable CEOs to assess performance quickly and make informed decisions without requiring lengthy analysis. This can be especially important when a quick response is required, such as when responding to changes in the market or dealing with unexpected challenges.
When presenting these tools to a client CEO, she immediately recognized the potential benefits:
- Quickly identify KPIs such as revenue growth, customer acquisition, and user engagement.
- Spot anomalies and pinpoint areas for improvement.
- Stay on track with the company’s goals.
- Make informed decisions and take action before problems escalate.
Table I displays a traditional Actual vs. Budget analysis in a dual-perspective framework. The top portion of the table provides a cost breakdown by category, such as personnel expenses (e.g., salaries and benefits) and third-party costs (e.g., outsourced services). The lower section of the table categorizes costs by functional area, including Sales & Marketing, Research & Development, Support, and General & Administrative. While this layout offers valuable information, it can be challenging to see the big picture and requires careful attention to identify key insights.
On the other hand, charts I, II, and III present the same information in a visual format:
- The budget is highlighted in purple color
- The actuals are represented in black color
- Budget surplus or deficit is mentioned above each item
- For items that are under the budget, the percentage is presented in black color, while for items that are over budget, the percentage is displayed in red color.
In this case, the CEO was able to promptly identify a matter requiring further examination concerning his General & Administrative expenses, which were over budget, while other expenditures were on track.
Let's take another instance concerning startup revenues and Annual Recurring Revenue (ARR). By referring to Chart IV, we can promptly comprehend the “underlying narrative behind the numbers”. Although the company exceeded its ARR objectives by an impressive 130%, only 83% of the revenue targets were met, as indicated in red. The CEO promptly recognized that the shortfall was primarily attributable to non-ARR revenues, including implementation and other services.
Efficient and comprehensible charting can expedite the data analysis, providing actionable insights into KPIs with minimal cognitive strain. My client’s CEO acknowledged that relying solely on numerical tables could impede sound decision-making. I strongly advise startup CEOs to prioritize visual aids in their managerial reporting, allowing them to swiftly comprehend significant trends, pinpoint areas of concern and make well-informed strategic decisions to enhance productivity.
