The majority of automobiles on the road today have a multitude of sensors onboard and provide the driver with key information. It may be that a component is not operating properly or that a problem may soon occur. If there is a low tire or other leak in a pressurized system a warning light is displayed giving time to take the vehicle to a repair facility. Some of the latest sensors warn of drifting from one lane to another and the danger of colliding with another object. All of these are meant to make driving safer.
In the same way, a business should have its own sensors to give management time to react to changing conditions. For example, a weekly or monthly operational report that shows current trends in sales and revenues can prevent end of the month surprises. Data may be shown by product line, department and include margins indicating where the highest levels of revenues are being generated. Disruptions of supply may become evident along with products that are due for upgrade or discontinuation. Cash flow reports can prevent the possibility of running low on the capital needed to keep the business operating. Identifying issues early gives time to obtain additional funding, liquify assets or make changes in purchasing and expense spending. It can also signal the need for a review of accounts receivables and ensure credit customers are paying as promised. Return on Investment reporting can sense if a marketing campaign and money being spent to develop new business is bringing in the expected revenue. They help keep the business in the right lane to be profitable. Regular customer satisfaction surveys measure the quality of products and services sold along with highlighting areas of needed employee improvement and training. Reviewing the business plan periodically will ensure the original mission and vision are being carried out. This sensor can show how the business has executed against its objectives to win against competition and if changing markets have created a need for adjustment. The analysis also reports how well goals have been met and promote discussion as to why they were missed.
Depending on the business there may be other sensors to put into place, but what is important is to understand the current health of the business and just like in your automobile, don’t ignore the warnings.
Ted Saul is a business coach that assists with Business Plans and Project Management. He holds a master certificate in project management and has earned his MBA from Regis University. Ted can be reached on LinkedIn, TedS787 on Twitter or emailing Ted@tsaul.com.