When Dale Earnhardt, Jr. steps behind the wheel of his high performance race car, do you think he knows first-hand how much oil is in the engine or how much fuel is in the tank or even how many pounds of pressure the tires are under? Of course he doesn’t. There isn’t time between breaks for him to follow his crew and check to ensure they’ve done their jobs. Nor should he, he’s hired the best, put the latest technology on the road, and knows from experience what to expect. He has the gut instinct that has delivered him many championships and a dashboard that offers instant feedback of what’s happening “under the hood.”

As an entrepreneur, your gut instinct can help you avoid pitfalls, but when it comes to operating your business and attaining maximum profitability, you most likely rely on a “dashboard” that provides information on how well your business “vehicle” is performing.

A car has a temperature gauge, a fuel indicator; even a rotation per minute (RPM) readout that measures how “hard” the engine is working. Your business dashboard is very similar. Daily customer calls, sales and other performance measures offer critical feedback at a glance. However, unlike a car, a business dashboard must be customized for your business model.

Are you operating like a Model T or a Ferrari?

Many companies manage in a blind fog, relying on financial statements that are 30-90 days old to make important business decisions. In short, they are relying on a dashboard that belongs in a company that operated 20 years ago. These “Model T” dashboards from yesteryear offer little more than historical recordkeeping capabilities. Today, we call these performance measurements lagging indicators because they lag in time from when data is collected to when it is actually available for analysis. Imagine what Dale would say if he had to wait until after he had lost the race, to see that there was a problem with the car that could/should have been fixed in an earlier pit stop!

Just like cars, business performance demands have increased too. Today, technology creates both the opportunity and competitive environment that demands that you operate with a better dashboard. The model needed today is more like a Ferrari – an optimum, high-performance machine that offers maximum output. An effective dashboard can free you of day-to-day operational duties so you can focus on managing, and possibly growing, your business. What’s even more exciting is that there’s now a proven way for you to know at a glance how well your business is performing and what areas need attention. This state-of-the-art tool utilizes leading indicators. These feedback mechanisms provide real-time information about all areas of your company’s performance so you can “shift on the fly” and make needed strategic adjustments to your business strategy.

In the next article, we will examine the tools to build your company’s customized dashboard with specific emphasis on “What you can measure, you can manage.”