Indicators, not brake lights. What’s on your business dashboard?

When times are good, when the economy is growing, when growing sales is easy, it’s very easy to get complacent. But when times are hard, economies are flatlining, and sales are shrinking, the need to understand a business’s key metrics becomes very apparent.

So often businesses focus on the wrong metrics, like what’s easy to track rather than what’s right or vanity rather than sanity.

So how do you make sure you don’t fall into that trap? Ask the question, “Is this an indicator metric or a brake light?”

A driving lesson

What do I mean by that? One of the key lessons I was taught by my driving instructor was “mirror, signal, manoeuvre (e.g. braking)”. When driving, we signal our intention first and then our brake lights show what’s happening.

Indicators should be flashing well before the brake lights glow, if I’m the following driver by responding to the indicators I give myself plenty of time to make adjustments to my driving before the car in front’s speed reduces ensuring I don’t go into the back of them!

Indicators and brake lights

When I review a business’s dashboard, the metrics are filled with “brake lights” showing that the business is already stopping rather than “indicators” showing that there might be problems ahead of time to make adjustments to avoid them.

For example, the business dashboard might include sales figures. But if sales are dipping it’s too late to correct, the stopping is already happening. Whereas lead generation is an indicator, if lead flow is slowing then there is time to review lead generation activity before the sales start to drop.

Often these indicators are less easy to track and don’t have the board room table kudos. My finance software can easily generate a sales report. Still, even many CRM systems are far less capable of generating accurate lead analysis reports, but just because it’s easy to generate a report doesn’t mean it’s the right one.

So, as you plan your business dashboard for 2024, make sure you focus on indicators and not brake lights so that you can drive your business to success!

Ian O’Donnell MBE is a Teaching Fellow in Enterprise and Entrepreneurship

Photo by Jan Huber on Unsplash