While we’d all agree about how COVID has adversely affected many areas of our lives and businesses, we’d also have to admit that our industry fared well in 2021. Most of our dealer partners across the country have told us 2021 was a strong year from a revenue standpoint.

Many of those same folks, however, shared that while overall revenue dollars were higher, they didn’t feel like they did as well as they should have from a margin standpoint. For some, they were just so busy that many things they’d normally pay attention to sort of fell through the cracks.

Will 2022 be as strong? It depends on who you ask. Either way, the first part of the year is always a great time to step back and refocus on fundamentals.
You’ve heard the question a million times, “Are you working on your business, or in your business?”

I get it … the size of your business has an enormous effect on the answer to that question. Labor issues, prevalent long before, and exacerbated by, COVID continue to drive how we operate.

Working in and on don’t have to be mutually exclusive. One of the keys to doing this is determining the most important metrics that define the strengths and weaknesses of your business and figuring out a cadence allowing for regular review.

Last week at an industry event, someone that I have the utmost respect for posed a question for the owners in the room. “Is your monthly P&L an autopsy, or a total shock?”

In most cases, autopsies are performed to confirm a previous determination of causation. This goes to our original question of leading versus lagging.

Let me explain.

For many years, I’ve spent the last week of every year investing time in setting goals in all areas of my life for the coming year. I would review the goals and results from the prior year and how I was progressing on my medium- and long-term goals as well, and then set new short-, medium- and long-term goals for the coming year.

I became much more successful in achieving goals when I began to define specific actions, when taken on a regular basis, would lead to overall achievement.

Goals, you see, are lagging indicators. In other words, lagging indicators are the results you hope to achieve. The individual actions are leading indicators, as focus on those actions (if properly defined) virtually guarantee the lagging results you seek. In many organizations that we work with, more time is spent tracking lagging indicators than the leading actions that could more readily affect success.

Of course, there’s work that goes into capturing the information necessary to properly define those leading indicators. Over the course of our next few visits, we’ll lay out the process and help overcome the shock.