Are you Leading or Lagging?

March 27, 2017

In my last blog and Ask Rob video, I focused on cash flow and the important story it tells about the health and the near-term future of a company. There are many metrics to pull, but sometimes companies get so wrapped up in numbers that leaders can’t possibly read and digest them all. Good metrics help us answer the question, “How are we doing?” and great metrics help us predict, “How will we be doing?” We use them to understand the past and to better plan for the future.

Leading a business is like driving a car. What would happen if you covered your windshield with black paint and were asked to drive a route while ONLY looking through the rear-view mirror? Would it be possible? What words would you use to describe this experience? How about the other way around – driving a car without a rear-view mirror?

As you can see from this analogy, some of the most important information for avoiding peril and successfully navigating difficult terrain is what you can see before you are there! Metrics can help you to look ahead. When you drive at night, your headlights have to shine out farther the faster you are going in order to give you visibility to drive safely. Metrics have to be your headlights, helping you to see where you are going.

The rear view mirror and headlights of your business are equally important; you must be able to look behind as well as ahead. We call these leading and lagging indicators Key Performance Indicators (KPIs). KPIs help you determine where you will be in the near future (leading indicators) and where you have successfully been in the recent past (lagging indicators). The most successful growth companies measure and monitor both.

Are you pulling the best metrics to help you identify your KPIs? Do you know how your company stands to perform next quarter? Give me a call today and let’s get started making your business a successful, high growth company.