Lead Indicators vs. Lag Indicators

Lead indicators ‘lead the way’ for a business.

They give you an insight into what the future will look like.

What’s ahead. What’s coming your way.

Or not.

Lag indicators, on the other hand, tell you what’s happened.

How you went. How you performed.

Financial reports are lag indicators. They show you the results for your business. How you've done.

Lag indicators cannot predict the future.

But they can give you some clues about what your lead indicators should be.

Take Sales Revenue for example.

Because it’s the first number on the Profit & Loss Statement it’s tempting to think that’s where things begin.

But in fact, there’s a whole range of activities which have occurred before that sale was made.

All of those separate activities need to be measured.

They become your lead indicators.

They give you an insight into what your future will look like.

You can work on these to influence the future you will have.

The trick is to focus on the ones that are relevant for your business.

Every business has them.

You need to find the right ones for your business.

Work with them.

Tweak them.

Measure them.

Then repeat.

Let me know if you need a hand.