The first and most critical step is to identify the areas where founders and CEOs experience pain as their business grows. By developing KPIs that highlight how the organization is performing across a number of areas, a dashboard allows the founder or CEO to manage by exception, that is, focusing on only those areas that are underperforming relative to predetermined levels. Next, we identify areas of strategic importance to the business in both the short and long term. This helps us develop KPIs that are leading versus lagging indicators, thus allowing the company to be proactive and prevent emerging issues from hindering future growth.

If the goal is to grow internationally, for example, we will help the entrepreneur develop KPIs that gauge how well the company is managing its expansion by measuring metrics in both new and established markets. Some typical examples include the pipeline of sales leads, the percentage of converted leads, sales-force productivity by cohort, customer-specific KPIs such as concentration and satisfaction, and product-specific KPIs including revenue contribution by product type and gross margin. The key is to jointly develop KPIs that truly drive the success of the business and then measure them consistently and regularly over time.

Next, we evaluate the availability of the data required to generate the KPIs we want to measure. Sometimes we develop KPIs that provide insight but require too much investment in infrastructure to justify the value of the information. In these instances, we will compromise in order to strike the right balance between cost and the value of the information.

After we narrow our focus, we prioritize the KPIs based on their impact to the business and its growth strategy. We recommend that entrepreneurs limit their dashboard size to a single page in order to yield a set of metrics that is both insightful and succinct.

Finally, once the KPIs are drafted, we begin capturing baseline information and re-evaluate the metrics on a regular basis. If the KPIs are less insightful than we envisioned, we revise them to provide us with the desired information. Also, because companies change and strategic priorities change, you need to make sure that you continue to measure the KPIs that are most meaningful to your business as it evolves.

Time is a precious resource for CEOs and top managers at growing companies—there simply are not enough hours in the day to attend to every business need. However, by creating a dashboard, we provide executives with a quick read on performance in the many functional areas that are essential to growing the business. As I mentioned previously, the greatest value a dashboard can provide is the ability to identify potential problems early and fix them before they become critical.

For example, we are working with the CEO of a fast-growing telecommunications technology company. He is constantly on the road selling his company’s products to clients and telling his story to investors as the company nears an initial public offering. He asked if we could create a dashboard that showed him how key functions—and functional managers—at his company were performing in his absence. After several iterations, we developed a customized dashboard that he now reviews regularly with both the board of directors and his ever-expanding group of functional managers. The dashboard allows him to stay on top of progress in operations, product development, marketing and finance whether he’s at the office or out on a sales trip.

Key performance indicators can be tailored to reflect specific business objectives, providing a quick summary of the factors that will drive success. For example, we work with a financial services firm that uses its dashboard for tracking expansion outside of its core market in order to measure progress toward its goal of global expansion.

Additionally, a company that tracks KPIs over a sustained period of time has a record of its progress in critical areas of the firm’s operations. We work with a medical practice management company, for example, that maintains detailed records of the number and type of services offered by each office, revenues by service type and other indicators. If the company’s management wants to explore a strategic merger or public offering in the future, the dashboard information provides a record of each clinic’s performance. It also allows the company to develop and share detailed insights on overall company performance to investors or potential buyers. This type of insight is invaluable as it gives investors the confidence that they are buying a business with a track record of replicable performance over time.