Why Your Numbers Don’t Mean a Darn Thing — Until You Compare Them

by MHolland | Nov 21, 2025 | Business Tips, Cash Flow, Systems

A number, on its own, is useless. Your weight, your revenue, your costs — none of it means anything in a vacuum. The power comes only when you compare it to something else.

You step on the scale. The number is meaningless until you compare it to last year, last month, or the goal you’re aiming for. Business works the same way. Your financial statements are just noise until you anchor them against other periods.

Comparisons Give Your Numbers Context

There are a few “must-do” comparisons every business owner should track:

• This month vs. same month last year

• This month vs. last month (best for non-seasonal industries)

• Year-to-date vs. last year-to-date

These comparisons turn isolated numbers into insights. But to make meaningful comparisons, your accounting has to follow one core principle.

The Matching Principle: Why Accrual Beats Cash

If you want to see reality, you need accrual accounting. Here’s the short version:

• Revenue is recorded when it’s earned, not when you get paid.

• Expenses are recorded when they’re incurred, not when you cut the cheque.

That’s the matching principle: match earned revenue to the costs required to generate it.

Cash accounting hides the truth. Accrual accounting reveals it.

The catch? Vendors don’t always send bills on time. You push them, you remind them — and sometimes they still miss the cutoff. Perfect matching becomes impossible, which leads to distorted month-to-month results.

That’s exactly why you need something more powerful.

Rolling 12-Month Figures: The Most Underused Tool in Business

If you want to see the real story — stripped of seasonality, noise, and timing issues — use rolling 12-month numbers.

Here’s how it works:

• For each month, you total the previous 12 months.

• January shows Feb–Jan.

• February shows Mar–Feb.

• March shows Apr–Mar.

• Every month becomes a mini fiscal year.

This eliminates seasonality.
This catches late vendor bills.
This shows true direction — not momentary bumps.

What to Track in Rolling 12-Month Format

Six categories will give you a complete view:

1. Sales

2. Cost of Goods or Cost of Services Sold

3. Direct Wages

4. Indirect Wages

5. Sales & Marketing

6. Operating Expenses

Put them on a graph.
Don’t bury them in a table.
You need to see the trend lines because trend lines don’t lie.

What Rolling Trends Reveal

The story becomes obvious the moment you graph it:

• Sales creeping upward? Good.

• Sales flat but labor rising? Productivity problem.

• Sales falling but headcount unchanged? Overstaffing.

• Operating expenses rising faster than sales? Your cost structure is drifting.

You don’t fix this with hope. You fix it with decisions.

If Costs Are Rising Faster Than Sales, You Have Three Levers

Only three. People fool themselves into thinking there are dozens. There aren’t.

1. Raise Prices — But Tie It to Value

Never raise prices because your costs went up.
No customer cares about your problems.

You raise prices when you improve value:

• Faster turnaround

• Better service

• Guarantees

• Higher quality

If you haven’t earned the increase, don’t take it.

2. Increase Volume Without Increasing Cost

Classic scalability:

• Better processes

• Better marketing

• Better tech

• Better throughput

More output with the same cost base.

3. Improve Productivity or Supplier Performance

This is the operational grind:

• Better labor allocation

• Better training

• Better suppliers

• Better pricing

• Cutting dead weight

Rolling trends will show you exactly where the rot is starting — long before the fire starts.

The Real Power: Early Warning Indicators

Rolling 12-month numbers give you a 30,000-foot view of your business. They smooth out seasonal bumps and compensate for imperfect matching. They reveal direction — the thing every owner needs most.

They won’t just tell you what happened.
They’ll tell you what’s coming.

And if you’re serious about running a healthy, profitable business, that’s priceless.

Thanks for reading…

Stop Confusing Your Costs with Your Value

by MHolland | Nov 14, 2025 | Business Tips, Cash Flow, Systems

Business owners mix up cost and value all the time — and it’s wrecking their pricing strategy.

Costs go up, and the default reaction is predictable: “We need to raise prices.”

Here’s the uncomfortable truth:
Your customers don’t care about your costs.
They care about what something does for them.

And nothing drove this home for me more than a chair.

The $2,200 Chair I Actually Want to Buy

I was shopping for an office chair the other day and found one that was insanely comfortable — like, life-changing comfortable. Sleek design, perfect ergonomics, the kind of chair that makes you think, “Okay… maybe my spine is worth investing in.”

I asked the price.

$2,200.

For a chair.

My first reaction?
“Are you out of your mind?”

So I asked why it was so expensive.
The salesperson didn’t flinch: “Made in Germany.”

That got my attention. German quality usually means engineering, durability, pride of workmanship. I went home and researched the brand. Turns out they hand-build their chairs, obsess over quality, and back it with a 12-year guarantee.

Suddenly… it didn’t feel crazy.
It felt earned.

My perceived value skyrocketed because nothing else I tried came within a mile of the comfort and build quality. And because I work from home, this wasn’t a splurge — it was an investment.

And here’s the kicker:
It’s still just a chair.
This family-owned German company isn’t competing on price. They’re competing on value.

Design: One of the Most Underused Value Levers

Stunning design is value. Full stop.

Furniture with beautiful lines, materials, and craftsmanship always costs more because beauty itself is a feature. When you combine that design with high build quality, you carve out a category where competitors simply can’t touch you.

That’s what premium pricing looks like.

So How Do You Raise Prices Without Losing Customers?

Simple: Increase value, not excuses.

Your rising costs are your problem, not your customer’s.
Your value proposition is their reason to pay more.

Here are the levers that actually move the needle:

1. Create a Unique Value Proposition

If you build products, where’s the value?

• Superior design

• Better durability

• Higher performance

• Customization

• A story customers want to be part of

Your value prop should be something people can feel immediately.

2. Bundle in a Way No One Can Copy

Bundling works when the bundle itself becomes the differentiator.

Not “three things in a package.”
But a curated combination that solves a problem in a way your competitors can’t replicate without overhauling their whole business.

3. Offer a Guarantee That Means Something

A real guarantee is a value booster because it tells the customer:

“We stand so firmly behind this that we’re absorbing the risk.”

A strong guarantee forces operational excellence.
If you underperform, the guarantee will bleed you.
So you raise your quality, your consistency, your standards — and pricing follows naturally.

4. Deliver Service That Makes You Untouchable

This one is massively underrated.

A business recently impressed me through WhatsApp, of all things:

• Fast responses

• Detailed answers

• Professional tone

• Deep product knowledge

I checked Google reviews later — almost all 5 stars, and not a single person mentioned price.
All the praise was about service.

Contrast that with most businesses today:
Try phoning them. Good luck.
Try messaging them. You’ll age a decade waiting.

Too many companies treat phone calls or WhatsApp messages as an interruption, not an opportunity. Meanwhile, the customer with the most money — the one who could’ve become your biggest buyer — leaves before you even knew they existed.

The Bottom Line

You can’t raise prices because your costs went up.
You raise prices because your value went up.

That German chair didn’t get to $2,200 by accident.
It got there because:

• It’s better

• It’s unique

• It’s guaranteed

• It’s backed by craftsmanship

• And it delivers a feeling nothing else matched

That’s how you escape the race to the bottom.

Thanks for reading…

What Gets Measured Gets Managed — So What Should You Measure?

by MHolland | Oct 10, 2025 | Business Tips, Cash Flow, Systems

Most businesses produce, at minimum, a Balance Sheet and an Income Statement.
Beyond that, not much gets measured.

But how do you even know what to measure?

There are dozens of things you could measure — but that doesn’t mean you should.
For example, in our firm, we don’t measure hours, even though we’re a professional service business.

We measure results — the deliverables promised in our Fixed Price Agreements.

Why?
Because people don’t buy hours. They buy outcomes.
And just like our clients, we don’t pay our contractors for time — we pay for results.

Step 1: Define Your Critical Success Factors

Before you can measure anything meaningful, you have to define your Critical Success Factors (CSFs).

Let’s break that down:

• Critical — without it, you fail.

• Success — it’s something you must get right to succeed.

• Factor — a fact or situation that directly influences a result.

Put simply:

A Critical Success Factor is something that determines whether your business will succeed or fail.

For us, it’s simple — if we don’t deliver results to clients, we fail.
If we just show up saying, “We worked 100 hours, please pay $X,” nobody cares. Clients pay for outcomes, not effort.

Step 2: Turn Your Success Factors into KPIs

Here’s the key point:
You can’t measure a Critical Success Factor directly — it’s too broad.
You can only measure a Key Performance Indicator (KPI) that reflects it.

Example: FedEx

• CSF: Overnight delivery.

• KPI: Percentage of on-time deliveries.

Customers don’t care about logistics complexity. They care that the package arrives fast and on time.
FedEx figured that out by talking — and listening — to customers.

We did the same thing back in 1997.
When we asked clients what mattered most, they told us they wanted Fixed Price Agreements.
Why?

1. They know the price upfront — no nasty surprises.
2. They can hold us accountable for results.

Who Always Has KPIs?

Two types of organizations never skip measurement:

1. Successful sports teams
2. Successful large businesses

Both measure relentlessly against their critical success factors.

Imagine a sports team that doesn’t track player stats, win-loss ratios, or training metrics.
Impossible. They wouldn’t last a season.

Yet small businesses do this all the time — operating without real measurement beyond the financial statements.

Step 3: Discover Your Critical Success Factors

Here’s the simplest way to uncover them:

1. Find what frustrates customers in your industry.

Ask: what do people hate about working with businesses like yours?

Take contractors, for example.
Most homeowners complain about:

• Showing up late.

• Leaving a mess.

• Sloppy work.

Now imagine the opposite:
Your team shows up on time, in clean uniforms, and leaves every job spotless — even using their own dustbuster.
You’d stand head and shoulders above your competitors.

2. Ask your customers tough questions.

Try these:

• “What don’t you like about our service?”

• “What are we getting right?”

• “If you owned our business, what would you improve?”

The answers are gold. That’s your roadmap.

Step 4: Build KPIs That Flow from Those Factors

Once you know what customers truly value, you can design measurable indicators.

Using the contractor example:
Your KPI could be the percentage of job sites that pass a post-job cleanliness check, verified by a daily photo or checklist.

Whatever your business, tie your KPIs directly to what customers care about most.

Step 5: Measure, Share, and Manage

If it’s not measured, it’s not managed.
And if it’s not shared, it won’t stay top of mind.

Build a simple dashboard with your KPIs and review it daily, weekly, or monthly — depending on your business rhythm.

Because what gets measured, gets managed.

A Few Core KPIs to Start With

Here are universal metrics that apply to nearly every business:

1. Number of new customers each month
2. Number of sales contacts or leads
3. Conversion rate from leads to customers
4. Average frequency of customer purchases
5. Average transaction value

Track them. Discuss them. Act on them.

That’s how you move from running blind — to managing with clarity.

Thanks for reading.
If you take one thing away, make it this:

What gets measured gets managed. But only if you’re measuring what truly matters.