The first metric type in the list from the last post was leading indicators.  Since these metrics provide advance alerts for decision makers, we commonly refer to them as “smart numbers.”  Smart numbers should be viewed on daily – or at least weekly – basis.  Some organizations even monitor smart numbers on an hourly basis.

To help you in choosing smart numbers, here are a few general types I have seen in my work as an advisor:

1. Revenue forecast.  For some businesses, this is based on factors like time of week/month/year, traffic volume, general economic attitude, etc.  For others, it is a view of the revenue
   pipeline – a cumulative view of upcoming work.  For example, it may be the dollar value of bids won and bids sold for a given period.
2. Effectiveness of delivering on value proposition. Every business has a value proposition.  You should have a smart number that measures your effectiveness in delivering on that promise to the market.  For example, if your business has a guarantee or return policy, track how many times you have to honor that guarantee, which can be converted to the dollar value of damages
   related to missing on your promise.
3. Cash position or availability.  Availability factors in cash-in-hand as well as cash available from a line of credit.  This may also take also take the form of modified working capital availability (total cash and receivables less payables).
4. Measure of your base economic unit of value.  Every business has a base economic unit of value such as a billable hour or unit produced.  How many units have you produced and how many do you project to produce over a given time period?