There are only two stories that matter behind every financial performance. Until you understand those two stories you don’t understand your business. These stories cover all types of Revenue. These stories cover all types of Costs. It doesn’t matter what sector or what currency your business operates within. There are only two stories. The rest is mere detail. The stories are Volume & Yield.
If sales are down $400,000 this month or this year it’s because you sold less units, or you sold units at cheaper prices, or you sold more units at really cheap prices, or you sold less units at higher prices but the lower volume dragged down the performance to negate the benefit of the higher prices.
It works for costs as well. If your salary bill is higher than last year, you either paid the same number of employees a higher wage, or you paid more employees the same wage, or you paid more employees a smaller wage but the volume out trumped the lower yield.
Understanding your business is about grabbing the jugular reasons first – volume & yield.
