Financial planning is the cornerstone for sustainable growth of any business. As a SaaS business owner, forecasting and managing finances can be challenging. It involves tracking and analyzing various metrics, such as MRR, ARR, churn rate, and cost of goods solved. Investing in SaaS Dashboards can help you with this.
You can create a custom dashboard to analyze data and get useful insights into the financial health of your business. It will serve as an indispensable tool to track, analyze, and plan finances effectively. Now, the main concern is how you can do so. Don’t worry! We have got you covered. We are here with a detailed guide on how to use SaaS dashboards for better financial planning and tracking. Let’s explore this guide without further ado.
A Stepwise Guide to Use a SaaS Dashboard for Financial Planning
Step 1: Define Your Financial Goals
The first step is defining clear financial goals. Financial planning revolves around achieving specific targets, such as increasing revenue, reducing churn, or managing cash flow. Identifying them will help you focus on the key metrics and insights you need from your SaaS dashboard. When doing so, try to find answers to the following questions.
- How much revenue are you aiming to generate, both in the short and long term?
- What are your targets for maintaining or increasing profitability?
- Are you focusing on reducing operational or customer acquisition costs?
- What churn rate are you trying to achieve?
Once you manage to answer these questions, you will have clear goals in your mind and you can develop strategies to achieve them.
Step 2: Identify Key Metrics
Before setting up a dashboard, you must know key financial metrics relevant to your business. They will provide critical insights into the financial progress of your business. The following are some primary metrics that you need to track.
Monthly Recurring Revenue (MRR): It’s the total revenue you generate each month from subscriptions. This metric is crucial for forecasting and long-term planning.
Annual Recurring Revenue (ARR): It’s the value of your recurring revenue on an annual basis.
Customer Acquisition Cost: This is the cost of acquiring a new customer, including sales, marketing, and onboarding expenses.
Customer Lifetime Value: This metric tells about the total revenue customers are expected to bring during their relationship with your company.
Churn Rate: It’s the percentage of customers or revenue lost over a given period.
Gross Margin: It’s the revenue you have after subtracting the cost of delivering the service (cost of goods sold or COGS).
Burn Rate: It tells you about the percentage at which you’re spending your bank reserves. It’s a critical metric for cash flow management.
Step 3: Select the Right Dashboard Tools
Once you identify key financial metrics relevant to your business, you are all set to start creating a custom dashboard. You can create a manual one using Google Sheets. However, it takes a lot of time and effort and may not offer the desired results. Therefore, you should leverage a SaaS dashboard tool to create it.
You can rely on Baremetrics for this purpose. It’s a trusted tool with a user-friendly interface. You can use it to create a SaaS dashboard and track different metrics. You can integrate it with data resources to avoid the hassle of entering data manually.
Step 4: Set Up Your SaaS Dashboard
Now, you have to set up your SaaS dashboard. You can do so in a few simple steps by using Baremetrics. First of all, you have to set up Baremetrics and visit the dashboard. Here you will see an option “Create a new dashboard”. You have to click on it to start creating it. After that, you can add metrics and visualize data in the form of charts or heat maps. Apart from that, you have to do a few more things:
- Integrate your financial and operational data from billing systems and accounting software. This will allow your dashboard to extract real-time data without manual effort.
- You should also customize the layout according to your specific needs. Make sure it can represent crucial metrics and KPIs in an easy-to-understand format.
- You should set up automated alerts for critical thresholds. For example, you can customize it to send alerts when churn exceeds a certain rate or cash flow drops below a set limit.
Step 5: Use SaaS Dashboard
After setting up your SaaS dashboard, you have to use it. One of the key advantages of these dashboards is real-time monitoring. Instead of waiting for monthly reports, you can track key financial metrics in real time. It will make it easier to quickly respond to trends, challenges, or opportunities. You can use it to:
Monitor MRR and Churn Trends: You can use it to keep an eye on subscription growth or decline. The dashboard allows you to track churn rates in real-time, so you can quickly respond to sudden increases. If churn spikes, you can investigate the root causes and fix them.
Track Cash Flow: With your SaaS dashboard, you can easily monitor your burn rate and runway. Real-time insights into cash flow ensure that you have a clear understanding of your firm’s financial health. It will help you make informed decisions about expenses and investments.
Watch Customer Acquisition Cost: Your dashboard enables you to track CAC in real-time. It will provide visibility into how much you’re spending to acquire new customers. As a result, you can adjust marketing and sales strategies promptly to manage CAC and align it with your financial goals.
Step 6: Make Data-Driven Decisions
The ultimate goal of using a SaaS dashboard for financial planning is to make informed decisions. It will provide you with a clear picture of the financial health of your SaaS business, enabling you to make strategic choices that align with your goals. For example, if CAC is higher than expected, you can reallocate your marketing budget toward more cost-effective acquisition channels.
Now, you are all set to use a custom SaaS dashboard for better financial planning. Make sure you add relevant metrics and monitor them to get useful insights. Once you get them, you have to make strategic decisions to achieve your goals.
