The Trend Is Your Friend
Why patterns in your numbers matter more than the numbers themselves
Most business owners look at a single year and ask,
“What is my business worth?”
Buyers do not.
They look at the trend.
And more importantly, they ask what the trend is telling them.
What the trend actually reveals
A set of financials is not a story.
It is a pattern.
And patterns raise questions.
If the numbers read:
loss, loss, profit, loss
No serious buyer focuses on the profit.
They focus on the inconsistency.
Because the immediate question is not how much did it make?
It is what changed — and is it repeatable?
This matters because value does not attach to isolated results.
It attaches to outcomes that can be sustained.
When the numbers look “odd”
In practice, irregular trends are where the real scrutiny concentrates.
A spike in profit does not automatically create value.
In many cases, it does the opposite.
It draws scrutiny.
Why?
Because a sudden improvement in performance started for a reason; often it sits on one of a few foundations:
- pricing decisions that are not commercially sustainable
- work accepted at reduced or negative margin
- deferred costs (maintenance, staffing, compliance)
- short-term behaviours designed to “get through” a period
None of these are unusual in business. But equally, none of them are transferable.
And when they are not transferable, buyers will discount them heavily.
Why this matters before a sale
Most owners only confront these issues when they are preparing to exit.
By then, the trend is already set.
And trends are difficult to unwind quickly.
A buyer reviewing three to five years of performance is not trying to be difficult.
They are trying to determine:
- which earnings are real
- which earnings are temporary
- which risks sit behind the numbers
If the owner cannot answer those questions logically and clearly, the deal becomes vulnerable.
Looking at your business the way a buyer will
The practical shift is simple.
Stop asking what the business made last year.
Start asking what the trends show.
Over time, a clean and consistent trend demonstrates:
- control over operations
- repeatability of earnings
- appropriate margins for the industry
- disciplined cost management
- reduced reliance on the owner
These are the signals buyers are looking for and these can be relied on.
Not explanations after the fact.
“What is my business worth and why?”
The question still matters and the answer can be revealed inside the trends and not simply in the headline numbers you wish to highlight.
The “why” will always come back to:
- whether earnings are consistent
- whether those earnings can be transferred
- whether the underlying assumptions hold up under scrutiny
In other words, whether the trend supports the conclusion.
The practical point
If something in the trend looks unusual, it is not something to ignore. Instead investigate it yourself.
Because unusual patterns do not disappear at sale. They become the focus of the negotiation.
And once a buyer starts pulling at those threads, every assumption is tested.
Conclusion
“The trend is your friend” is not about comfort.
It is about clarity.
A consistent trend gives confidence.
An inconsistent one raises questions.
And in a transaction, value follows confidence.
If you want to understand what your business is worth, start with the trend.
It will tell you where the value is — and where it is not.
If you are considering a future sale, I am available to discuss how a buyer is likely to interpret the trend in your business and what that means for value.
Kevin Lovewell
Negotia Group Pty Ltd
1300 551 757
