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:
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This month vs. same month last year
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This month vs. last month (best for non-seasonal industries)
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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:
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Revenue is recorded when it’s earned, not when you get paid.
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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:
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For each month, you total the previous 12 months.
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January shows Feb–Jan.
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February shows Mar–Feb.
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March shows Apr–Mar.
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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:
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Sales
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Cost of Goods or Cost of Services Sold
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Direct Wages
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Indirect Wages
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Sales & Marketing
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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:
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Sales creeping upward? Good.
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Sales flat but labor rising? Productivity problem.
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Sales falling but headcount unchanged? Overstaffing.
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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:
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Faster turnaround
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Better service
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Guarantees
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Higher quality
If you haven’t earned the increase, don’t take it.
2. Increase Volume Without Increasing Cost
Classic scalability:
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Better processes
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Better marketing
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Better tech
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Better throughput
More output with the same cost base.
3. Improve Productivity or Supplier Performance
This is the operational grind:
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Better labor allocation
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Better training
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Better suppliers
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Better pricing
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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…