Are You Driving your Business Using Only Rear View Mirrors?
You Become What You Think About
Driving is a must in Texas. It’s not like New York City where you can live, work and play without even owning a car. Here a vehicle is a must-have if you’re going to get around.
But what if you had a car that only had rear-view mirrors? No front window to look out of – it was totally covered. All you could use to help you drive were your two side mirrors and your main rear view mirror.
Imaging going 70 mph down the tollway with a crystal clear view of what is just behind you! How confident would you be? How fast would you be willing to go? Better yet, would you let your son or daughter drive your car? Certainly not!
But interestingly, that is exactly what most business owners do every day with their business. They drive their business without a front window – relying only on their rear view mirrors!
What am I talking about you say? Well, the rear view mirrors for your business are your financial statements – the P&L, Balance Sheet, Sources and Uses of Cash, etc. In fact, many of you are drive your business using only your bank statement – which is a really, really small rear view mirror!
What most business owners lack is the ability to see forward in their business – to “predict” the future. You must have KPI’s or Key Predictive Indicators in order to have a front window on your business. Let me explain with a real story about a local business owner.
This business owner has been in business for over 25 years. He is without question one of the best in his trade in the Dallas area. He has loyal customers, makes a steady profit and truly enjoys his business. But he realized he could do even better. So we started working together about 6 months ago.
One of the first activities we did was to identify the activities that preceded a sale in his business. We identified every step of his selling process and began simply counting the frequency of activity in each step on a weekly basis.
He was diligent at collecting the data from his team each Monday and we would capture the activity data on a simple spreadsheet. We graphed his data weekly in hopes that one day we might be better able to “predict” his sales activity.
Some of the pre-sale activity steps had a relationship to others. Some of them were not good predictors of anything. Finally, after collecting data for 24 weeks, we finally had enough data to begin to see patterns or trends emerge.
We identified that 70-75% of his quote volume on any given week would end up becoming actual sales 2 weeks later! This was a huge discovery! Now, rather than wait for a poor sales week to happen and simply get frustrated by it, he could “predict” his future sales and he gave himself and his team 2 full weeks to influence the actual outcome! How cool is that!
So, armed with this new insight (this clearer view of the future), he now manages his sales team (or they manage themselves) to eliminate their slow sales weeks. For the business owner, he is less anxious about this week’s sales revenues and more confident to drive his business faster!
And, the early results: he just closed May’s books and it was his highest revenue month in the history of his business!
Coincidence? I don’t think so! He moved from driving his business using only rear-view mirrors to driving using his front window view – his KPI’s – a clear dashboard of predictive indicators to help him see the future before it happens!
How about you? Would you like to improve your ability to see the future? Would you like to drive your business faster – with more confidence? If so, drop me a note and let’s get together.
I’ll show you how to super-charge your ride!
