I always advise the CEO’s that I coach to avoid this common trap by using lagging and leading indicators.
· Lagging indicators measure what’s already taken place, but they don’t forecast the future
· Leading indicators give you a glimpse into what is coming your way
You want to be able to track and measure numbers that give you both lagging and leading data, and then use them to support your decisions.
Your company’s metrics should be hosted live on a company intranet. Have a finance person be the person pulling the data together or making it look great on spreadsheets, while holding people in each business area responsible for ensuring the data for their respective area is updated on time, accurate and regularly reported.
Prior to building, purchasing, or even using dashboard software or web applications, I always mentor CEO’s to start using good old Microsoft Excel or Google Spreadsheets (which can then be easily shared with others). It will take you about 6-12 months of using and reviewing the data to really know how you want it to be represented.
These indicators should be easy to view so that only the outliers should jump out at you – meaning the numbers that are below or above your specified threshold for various metrics. There is no sense in wasting time reviewing numbers that are right where you want them to be, so have the others jump out at you. Play with each metric over the course of a year and, if possible, ask other companies what they use.
If you’re not a numbers person (common for entrepreneurs) here’s an encouragement:
IT’S EASIER THAN YOU THINK!
Don’t put it off. Measure your way to bigger growth and profitability.
pic Future Forecast