What's Your Revenue Trend? and… What Can You Do About It?

In this issue…

* Using trends to ensure your future

* 421 words (& 3 graphs!), total reading time about 2 minutes

The COVID impact has been felt by every CI company we know. But it varies dramatically, from reduced activity in densely populated areas to remarkable demand in areas where people own second homes. It’s important to understand what’s been happening to your company – and then to do what needs to be done to survive / thrive.

As usual, the starting point is to examine company revenues. Are they up? Down? Flat? Seems like an easy answer when you look at one month or one year compared to another. Our favored measure – the one that better illuminates which way a company is going – is to look at revenue trends.

TTM & T90

Last week, the Coffee used Trailing Twelve Months (TTM) as a baseline for evaluating your production backlog. TTM is a running total of the past 12 months’ activity – last January thru last December; last February thru January; last March thru February. Take each 12-month total and divide by 12 to get an average monthly value for each TTM period.

Here’s what a TTM revenue graph looks like…

The graph shows a company averaging under $200,000/month in early 2019, growing to over $300,000/month a year later. A great trend, right?

Now, let’s overlay the actual month-to-month revenues. Suddenly, a different picture emerges…

Really strong months July thru October contributed to a record 2019, but 2020 started a bit soft and then hit an awful April (thank you very little, COVID).

To get a better feel for the severity of a potential trend, we now overlay a graph of the Trailing 90 days averages (T90)…

This readily shows a steady decline starting back in November – pre-COVID – with April bringing us back to where we were a year ago.

What’s a mother to do?

Examine the Future

Last Coffee described comparing your 90-day production backlog to your TTM average. This helps answer the questions, 1) “How much revenue can we expect over the coming 90 days?”, and 2) “Will it continue the trend or improve it?”

If the trend will continue, some cost-cutting is probably in order. And some selling is probably needed, too. We’ll talk more about trends and strategies during this our 30-minute “1st Friday” webinar this week at 11a Central. If you’re not registered, click the link below to get signed up.

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