Strategies Frank Ross on 21 Oct 2006 08:49 pm
Comparing Years
I was working with a company who was obsessed with comparing the current year to the previous year. For example, if they wanted to know how they were doing sales-wise in the 2nd weekend in November, they would compare that November weekend sales figures to that of the 2nd weekend in November for the prior year. If they were above last year, they were doing well. If not, they were not doing that well.
A lot of businesses large and small seem to do this, but there is one huge thing wrong with this type of comparison. There will be exceptional years and there will be lean years. When you are only comparing to one year (the one before) is it that meaningful? Say for example, the prior year was one of those exceptional years. It is that horrible if your current year sales are down from that? Conversely, what if the prior year was one of those awful years. If your sales are up compared to that year, is that all so great?
So the point is, don’t get too hung up on comparing to last year. It’s fine to do, but take it with a grain of salt. A far better approach is to look at an historical trend over say the past 3 or 4 years. That type of comparison is far more meaningful that simply looking at last year.
– Frank Ross