January 11, 2018
When you hopped in your car to travel to the office today you just may have looked at the gas gauge on your vehicle’s dashboard to verify the status of fuel to cover the travels for the events of the day. Maybe you have a business meeting across town. Maybe you have a child’s sporting event right after work. Maybe you were just headed directly to the business. Regardless of what makes up your travels you may have referenced the gas gauge to make sure you had enough to cover the miles you were going to travel. Running out of gas is just not a great thing to happen. More importantly it is something you do have control over.
This reference to your gas gauge on your dashboard to make sure you are prepared is directly related to the running of your business. Not just in getting you to where you need to be in your car but more about using the indicators of the performance of your business to make sure your business has enough gas to get it to where you want it to go.
These days our businesses are tied into technology. This technology give us feedback on the metrics we choose to manage. If you are manufacturing something, you get feedback on production volume, quality etc. If you are in logistics or distribution, then you get input on inventory turns, counts, shipments etc. If in a service business, you may track billable and non billable hours as indicators. All of these indicators are metrics which give insights into how the business is performing. You have or set standards by which you evaluate current run rates and make adjustments when performance falls outside of those ranges.
The question for you this week – Do you have gauges set up to track your business?
When the business started – that infamous plan on the paper napkin, it most likely did not include metrics or gauges to see how your business was performing. Similarly, early cars did not have gas gauges either. They showed up on the scene in the 1920’s, some two decades after the automobile was first introduced to the world. So now it is time to add gauges to your business dashboard if you don’t already have them in place. If they exists, then maybe consider upgrading them or at least validate they are giving you the correct feedback to make the best decision for your company.
For years these performance indicators have been in the form of paper trails, many of which came after the fact and were present to the owner from a financial person of one sort or another. The first evaluation was, is the bottom line black or red! These financial reports, a month or so after the fact was the standard for many years. Unfortunately this data decision making model was like driving your car forward while looking in the rear view mirror. You could see what happened but not what was about to happen.
Much like the addition of the gas gauge to the automobile, the rear view mirror also needed to be added. It arrived much sooner on the vehicle as an extension of mirrors used on bicycles. It is important to know what happened so you can learn from history. It is critical these days to be able to plan and forecast what is coming at you so you can navigate to a better outcome. Getting back to the original statement about checking your gas gauge this morning. It was about forecasting your events of the day and was your vehicle ready to support the miles to be traveled?
We take the dashboard gauges in our car for granted. They light up each time we turn the key or push the start button. They immediately give us input and if we neglect them they have backup warning lights which remind us to inflate tire pressure or turn off the turn signal.
Your business needs to be viewed through the lens of the business dashboard. What key indicators do you need to know each time you start up your business? Things such as cash flow, accounts receivables, account payables, sales pipeline, backlog etc. need to be at your fingertips. If you have a business management system (software application), maybe it has a dashboard you can reference as the splash screen on your computer. If not then you need to have access to your financial data to gain important insights into how much gas you have in the tank.
Driving your business looking in the rear view mirror and ignoring your gauges? Call JKL Associates at (313) 527-7945 – your business mechanic.
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