Leading vs. Lagging Indicators
Monitoring several leading indicators and lagging indicators will help you run your construction business more effectively.
The idea behind the Balanced Scorecard is that you identify the success measurement along each of four perspectives of your business: financial performance, internal business processes, customer, and learning and development. The scorecard is then developed by breaking down each of the four key lagging indicators into key success factors, each of those into key drivers, and each of those into a representative leading indicator. When you finish, you will have somewhere between eight and 16 leading indicators.
The key to all of this is understanding the cause and effect of the systems that run your construction business. If you don't understand them correctly, you will not identify to the leading indicators that are right for you.
Ron Roberts teams with Guy Gruenberg as The Contractor's Business Coach. They show contractors how to grow their businesses profitably. To sign up for their FREE Newsletter or join their Private Club, visit www.FilthyRichContractor.com.
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