No sane personal turns off their headlines and attempts to drive down a road at night.
Cars have headlights for a reason: to illuminate what’s ahead and help you get where you are going. Mirrors and gauges serve similar purposes.
Businesses are no different. You need tools to help you understand how you’ve done, the health of the business, and what lies ahead.
Extending the analogy, mirrors are like financial and other reports that tell you where you’ve been. They are backward looking.
Your speedometer, tachometer, temperature, and fuel gauges tell you about the current operating condition of your vehicle much like production numbers, quality control info, customer service data, and other KPIs tell you if your business is operating as expected.
And your sales pipeline, financial forecasts, and other leading indicators give you an idea of what’s ahead, just like headlights on a car or traffic warnings from your navigation system.
It is critically important that you have a set of metrics – financial and operational – to really understand the state of your business. If you don’t, you are driving blind.
I’ve spoken with too many business executives who believe that as long as they can pay their bills, have some money left over, and production is getting product out the door that their business is doing fine. Perhaps it is. But maybe they don’t see warning signs of troubles ahead because they aren’t looking at the right gauges. Trouble could be around the corner.
Hemingway says it best in The Sun Also Rises:
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”
Don’t let your business slowly steer off course and force you to suddenly deal with simmering issues that may have been prevented or corrected if you had only known. Make sure you are using the right metrics to understand your business and not driving blind.