M10DiagnoseDiagnosis· Module 5
Reading Business Health
Profit is a lagging signal. By the time it falls, the causes have been visible for months.
- Manage
- Stabilise
- Finance
- Strategy
- Leadership
- ~5 min · Diagnostic
The business problem
Many founders judge the business by the bank balance and year-end accounts. Both report the past. The early signals of trouble — rising overdue receivables, slower quotes, more rework, staff turnover, fewer repeat customers — are visible much earlier but are not tracked together.
Why it matters
A small set of health indicators, reviewed regularly, gives warning while there is still time to act, and gives lenders and partners confidence that the business is managed.
What you will learn
- Distinguish lagging from leading indicators
- Choose health indicators across customers, delivery, money and people
- Set warning thresholds that trigger action
- Use the Health Check and Diagnostic as regular reviews
Core questions
- What would tell us three months early that trouble is coming?
- Which indicators do we already have but don't review?
- At what level should each indicator trigger action?
- Who reviews business health, and how often?
Work through the module
CaseWhat is happening?
Logistics company, 70 people · Illustrative teaching case
A logistics firm's annual accounts show a sudden loss. Looking back, the signs were there all year: on-time delivery fell each quarter, customer complaints doubled, overtime rose and two large customers reduced their orders. Each was known to a different manager; no one saw them together.
DecisionWhat does the leader need to decide?
Wait for monthly accounts to show problems, or review a small set of leading indicators every week?
FrameworkHow should they think about the problem?
The health panel
Choose two or three leading indicators for each function: for customers (enquiries, conversion, repeat rate), delivery (on-time, errors), money (cash days, overdue receivables), and people (vacancies, overtime, turnover). Give each a green, amber and red threshold.
ToolWhat can they use?
Business Health CheckDiagnostic
- Take the 5-minute Health Check to find the weakest areas
- Pick up to 12 indicators across the six functions
- Set thresholds for each
- Assign who reports each indicator weekly
ApplicationHow does it apply to their business?
Apply it to your own business:
- Take the Health Check
- Draft your 12-indicator health panel
- Backfill three months of data where you have it
ImplementationWhat changes?
What should change in the business:
- Review the panel weekly in a short management meeting
- Agree the action each red indicator triggers
- Replace indicators that never change decisions
ReviewDid it work?
How to tell whether the change worked:
- Did the panel flag an issue before it reached the accounts?
- Are red indicators leading to agreed actions?
- Has the team stopped arguing about whose numbers are right?
After this module you should be able to decide
Wait for monthly accounts to show problems, or review a small set of leading indicators every week?
And leave with: A short set of leading indicators for business health.
Sequence · Diagnosis