Reporting tools have made it trivial to produce dashboards, which has made it easy to measure a great deal and understand very little. The businesses that use numbers well tend to track a small set and review them consistently.
Leading and lagging
The distinction that does most of the work.
Lagging indicators report what already happened — revenue, profit, injuries, customers lost. They are accurate and it is too late to act on them.
Leading indicators predict what is coming — quotes issued, pipeline value, enquiry volume, near-miss reports, staff turnover intentions. They are less precise and you can still do something.
Most reporting is heavily weighted toward lagging measures because they are easier to produce. A business that only knows its results after the month closes is always responding rather than steering.
A core set for most businesses
Financial
- Revenue against forecast, with the variance explained by volume, price or mix.
- Gross margin percentage, tracked as a trend rather than a point.
- Cash position and the thirteen-week forecast low point.
- Debtor days, and the value overdue beyond terms.
Pipeline
- Quotes or proposals issued, and their value.
- Conversion rate, and how it moves.
- Forward work — committed revenue for the next period, which is the earliest warning of a coming gap.
Delivery
- On-time performance against what you promised customers.
- Rework, defects or returns as a proportion of output.
- Utilisation, for businesses selling time.
People
- Turnover, particularly among people you did not want to lose.
- Absence, watching for pattern rather than volume.
- Leading safety indicators — near-miss reports, hazard close-out, training currency.
Customers
- Repeat purchase rate or customer retention.
- Revenue concentration — what proportion sits with your largest few customers.
That is around fifteen numbers. Most businesses would be better served by that set reviewed monthly than by a dashboard with sixty tiles nobody opens.
Choosing well
A useful measure meets three tests:
- Someone can act on it. If a number moves and nobody can do anything, it is context rather than a metric.
- It is measured consistently. A definition that changes makes the trend meaningless, and trend is where the value is.
- It cannot be gamed into uselessness. Any measure people are judged on will be optimised, including in ways you did not intend. A target on quotes issued produces more quotes, not better ones.
Trend over point
A single month tells you very little. Small businesses have lumpy revenue, and one large job can distort a month entirely.
Track rolling twelve-month figures alongside monthly ones. The rolling number strips out seasonality and shows direction, which is what actually matters.
The review is the point
A report that is produced and filed changes nothing. What works is a short, regular meeting — monthly for most small businesses — that follows the same structure: what moved, why, what we are doing about it, and what happened to the actions from last time.
That final item is what separates businesses that use numbers from businesses that produce them. Actions without follow-up teach everyone that the meeting is theatre.
Keep it proportionate
A five-person business does not need business intelligence software. A spreadsheet updated monthly from the accounting system is entirely adequate, and building it yourself forces an understanding of the drivers that a bought dashboard does not.
Automate only once you know which numbers you actually use, which is usually after six months of doing it manually.
Benchmarks and context
Internal trend matters most, but external comparison is useful for knowing whether your margin or productivity is normal for your sector.
Stats NZ publishes business and industry data under an open licence, Figure.NZ presents New Zealand business data in chart form, and industry associations publish sector benchmarks. All are free, and all are more reliable than an impression of what competitors are achieving.
General information only, not financial advice.
