I was at an industry trade group association convention in 2009 and went to a seminar taught by CEO coach Kraig Kramers. He introduced me to a concept called the Trailing 12 Month Report (T12M). They have transformed the way I think about my business.

Most charts, graphs and report simply bundle totals into weekly or monthly totals. But if your business is seasonal like ours, it’s hard to get a gauge on how well we’re doing with a traditional report.

For example, our revenues for January (usually one of our slowest months) might be a fraction of what they are in August (usually our busiest month), but it might nonetheless be a very successful month, relative to what is typical for January.

T12M Reports remove this seasonality from your graphs and they are also very simple to understand. If you’re tracking a metric that you want to increase (revenues), a trend going up is good, and a trend going down is bad. If you’re tracking something you want to reduce (cost of goods sold or overtime), going up is bad and down is good.

Each data point in a T12M report represents a total of the prior 12 month period. As I write this, we’re nearing the end of January, 2015. Next week, when I’m analyzing the company’s performance for this month, the reports will include the preceding 12 month period, so February, 2014 through January 2015.

The reason these are powerful is that we are no longer comparing January to August (or any other month). We’re comparing how we performed in the preceding month relative to how we performed in that same calendar month in the prior year. So, if our revenues in January 2015 exceeded those from January 2014, our graph will have an upward trend. If each month we outperform our revenues from that same month in the preceding year, our business will always be growing.

T12M reports are also a great motivator and easy way to communicate to rank and file employees about how were are performing as a company. Three years ago, we started tracking how much rework (punchlist) we were doing. We posted the results using a T12M report on our wall right next to where employees come and go each day. Since the first year of tracking, we have reduced our rework from 1.56% of revenues to 0.81%. That amounts to a $30,000 annual savings. Our employees have gotten competitive about quality. As they say, what get’s measured, gets done.

Because thinking about the metrics in our company on a trailing 12 month basis has been so transformative for our company, we have integrated them as one way to view your data in our software for contractors.