Leading indicators are forward-looking metrics that are used to predict future financial results.
Lagging indicators measure the outcome of past performance, and are used to confirm results and evaluate effectiveness.
A financial metrics dashboard that includes both leading and lagging indicators is an effective tool to supercharge business financial results.
Some examples of leading indicators include:
- Sales training and re-training (hours trained)
- Marketing and promotional activity (ads placed)
- Events, samplings, market spends (time/dollars)
- New placements, additional shelf space or end caps
Examples of lagging indicators include:
- Monthly sales $, growth %
- Gross profit $, %
- Net operating income
- Days on hand in inventory
- Days sales outstanding in A/R
If you’re ready to build a dashboard of leading and lagging indicators, do this next:
- Watch the short explainer video below: Leading vs. Lagging Indicators
- Join the BBFA – a library of training courses, access to a beer industry CFO, and a network of beer wholesaler owners and managers who share ideas and best practices to build a stronger beer business
