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No quote this week.\u00a0 <\/span>I want to offer a tip you will find useful, but I didn\u2019t have a quote that would complement it.<\/p>\n One of my favorite management tools is a trailing 12-month average.\u00a0 <\/span>If you\u2019re familiar with this tool, stop here.\u00a0 <\/span>You already know what I want to tell you.\u00a0 <\/span>But if not, please read on.<\/p>\n Have you ever seen a chart that looks like the scribble of a 2-year old?\u00a0 <\/span>You can\u2019t tell if the trend is up, down, or flat, right?\u00a0 <\/span>A trailing 12-month average overcomes that problem with a smooth trend line that doesn\u2019t lie.\u00a0 <\/span>And it works for any data you want to track . . . sales, gross profit, expenses, net profit, or any other statistical information.\u00a0 <\/span>Here\u2019s how.<\/p>\n Let\u2019s say you want to track sales.\u00a0 <\/span>Imagine a chart where the vertical axis is dollars or units, and the horizontal axis is months of the year.\u00a0 <\/span>We can start in any month we like, but for this example, we\u2019ll start in January 2007.\u00a0 <\/span>The first point of our graph will be the sales results for January 2007 plus the preceding eleven months, totaled and divided by 12.\u00a0 <\/span>So the sum of sales, February 2006 \u2013 January 2007 divided by 12.\u00a0 <\/span>The next point on our graph will be February 2007 plus the preceding eleven months . . . March 2006 \u2013 February 2007, divided by 12, and so on.\u00a0 <\/span>Each point on the graph represents the current month plus the preceding eleven months, divided by 12.\u00a0 <\/span>You don\u2019t really have to divide by 12 . . . the trend line will be the same whether you chart the monthly average or the entire 12-month total.\u00a0 <\/span>But dividing by 12 gives you a monthly average that you can then compare to your actual month\u2019s result.<\/p>\n To really see a solid long-term trend, it\u2019s best to plot your data over three years . . . 36 data points on your chart.\u00a0 <\/span>Plotting a shorter term will make the trend, whatever it is, less visible and less convincing.<\/p>\n Since each point on the chart represents an entire year\u2019s worth of activity, seasonal ups and downs get leveled out as do one-time sales spikes (as for instance, a large sale that you don\u2019t expect to repeat).\u00a0 <\/span>As a result, you get a nice, smooth trend line that tells you clearly and honestly whether the data you\u2019re tracking is going up, down, or flat.\u00a0 <\/span>It\u2019s a terrific tool to quickly and accurately identify trends that need corrective action.\u00a0 <\/span>It\u2019s also a tool that can be used as a budgeting or forecasting aid.<\/p>\n For more on this and many other management tools, I recommend Kraig Kramer\u2019s \u201cCEO Tools\u201d . . . it\u2019s crammed full of useful ideas to help you improve productivity, results, and profits.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" No quote this week.\u00a0 I want to offer a tip you will find useful, but I didn\u2019t have a quote that would complement it. One of my favorite management tools is a trailing 12-month average.\u00a0 If you\u2019re familiar with this tool, stop here.\u00a0 You already know what I want to tell you.\u00a0 But if not,<\/p>\n