Whether you think precision shooting (or “sniping”) is an art or a sport, you soon learn how much technical skill is involved.
You also learn how much difference there is between a skilled shooter and a beginner.
Like most things, the more you practice the better you get. But in this case, you can learn a lot just from what happened with your previous shot.
And it’s the same with determining what to target with your business.
The most logical thing to target
If it’s your first time at the range, you’d probably aim the crosshairs directly at the target. After all, that’s what you’re trying to hit, right?
Unfortunately there’s a good chance you’ll miss completely.
Why? Because there’s a good chance you didn’t factor in wind speed, heading, bearing, angle, elevation, target speed, and so on. Each one can affect the outcome, and unless you change your aim to compensate for them, you’ll keep missing your target.
And it’s the same with aiming for profits in your business. They should definitely be your target, especially if you want your business to still be around in a few years. But they’re not always what you should be aiming for.
Factor in the variables
Just as precision shooter compensates for everything that will affect the bullet’s path, you should compensate for everything that can affect your profit. This could include things such as:
Average transaction value
Number of transactions per client per year
Number of new leads
Any other indicators that affect those numbers.
Lead vs. Lag Indicators
In the book, The 4 Disciplines of Execution, co-author Sean Covey clearly explains the difference between lag and lead indicators. And profit is definitely a lag indicator.
Lag indicators are end results. Lead indicators are the activities that create results.
Unfortunately, a lot of business owners don’t plan how to get there: they fail to identify the lead indicators that produce the lag indicators.
For instance, revenue comes from converting leads, getting these new clients, and helping them with relevant products.
How do you know where to focus? How do you choose your lead indicators? This will be dictated by the challenges your business is currently facing.
If you’re team isn’t very busy, and there’s not a lot of profit left at the end of the month, your indicators may well be acquiring and converting customers. On the other hand, if you’ve got too many clients to keep up with but no money in the bank, focusing on your average transaction value (i.e. putting your prices up) could be the key.
Shoot to thrill!
Thinking about where you’re aiming instead of the target won’t be easy to begin with. After all, you’re in business to make a profit, so it’s natural to make it your main focus.
But by thinking less about this lag indicator, and more about your lead indicators, your business will soon be hitting your targets. With consistency. And precision.