Bringing Value to The Table... Issue 10.21.22

Last night I had a conference call with the CEO of a company in the services industry. He asked me several questions about the peaks and valleys of his business and the level of experience obtained in different scenarios. We finished our session and then I reflected on how many CEOs, COOs and CFOs have had a number of experiences going thru peaks and valleys without getting the additional benefit of cycles and pattern identification.

Every business goes thru a cycle, peak and valleys will always be there it a sign of movement. Same goes for patterns which in turn develop trends.

Today’s invitation is simple but very revealing.

Pick the main revenue line of your business by quarters for at least the last 5 years. You will have 20 columns. Grab the number in column 2 and divide it by the average of column 1, 2 and 3. Then, do the same calculation across (in Excel). This will give you a fractional number per column, either above 1 or less than 1. Then, create a linear graph of the results (19 columns).

In your graph, the value 1 shows your trend, every value (quarter) above or below 1 shows your peaks and valleys from your trend. Then, every period you see your data line going up from 1 then going down below 1 and then back up to 1 -It means a cycle.

Pay attention to this graph, since it will tell roughly how long it takes your business to sustain a trend (upwards or downwards). At the same time, investigate what was going on in those quarters. In other words, new client, new employee, loss of products, new marketing program, etc. ?

This is crucial information for you to identify those patterns and therefore modify your business “behavior”.

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