Client Onboarding Checklist: Steps, Templates & Best Practices
No matter the size of your business, tracking your growth pattern is a recipe for success. However, it can be easy to get distracted by short-term spikes or trends and fail to see the bigger picture. That’s where year-over-year growth analysis comes in handy.
Year-over-year growth helps you track success over a longer period of time. The extended time period of measurement gives you a true picture of your performance. It also helps you uncover trends and patterns in your financial performance beyond short-term fluctuations.
In this article, we’ll explain what year over year growth is, its benefits for businesses, investors and stakeholders and how to calculate year-over-year growth for your business.
Year-over-year (YOY) growth, a key performance indicator, compares growth in one period with a corresponding period from the previous year.
For instance, financial reports may indicate that a specific business consistently reported an increase in revenues in the third quarter over the past three years when analyzed on a year-over-year (YOY) basis.
Compared to month-to-month comparisons, year-on-year growth provides a more informative insight. It gives you a clear picture of your company’s overall growth or decline. At a glance, you can see if you're improving, stagnant, or worsening.
More importantly, you can gauge how you’ve performed without seasonal trends, short-term fluctuations, monthly volatility and other factors that may distort the true picture. YoY growth can be used to track revenue, average sale value, expenses, profits, leads, conversions, or any metric you’re looking to improve over time.
Below is a list of the common metrics you need to consider when calculating year over year growth
1. Sales Revenue: Evaluates the year-over-year increase or decrease in total sales, providing a snapshot of the company's revenue growth.
2. Cost of Goods Sold (COGS): Assesses how effectively the company manages its gross margin by examining the changes in the cost associated with producing goods.
3. Selling, General & Administrative Expenses (SG&A): Measures how executives control corporate office expenses, indicating efficiency in operational management.
4. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA): Serves as a proxy for cash flow and measures operating profit, providing insights into the company's operational efficiency.
5. Net Income: Compares the bottom line of the business over time, reflecting changes in overall profitability.
6. Profit Margin: Examines the change in the percentage of profit a company retains from its revenue. It helps assess the efficiency of cost management and pricing strategies.
7. Cash Flow (YoY): Analyzes the change in cash generated or used by a business in its operations, investments, and financing activities.
8. Return on Investment (ROI): Evaluates the change in the return generated on investments. Positive growth indicates that the company is generating better returns on its investments.
9. Earnings Per Share (EPS): Analyzes the bottom line on a per-share basis, offering a perspective on the company's profitability per outstanding share.
Let’s take a look at the common economic indicator used to calculate year-over-year growth.
1. Inflation Rate: Tracks the percentage change in the general price level of goods and services over a year, reflecting the erosion of purchasing power.
2. Unemployment Rate: Measures the percentage of the workforce that is unemployed and actively seeking employment. This provides insights into economic health and labor market conditions.
3. Gross Domestic Product (GDP): Quantifies the total value of goods and services produced by a country, indicating the overall economic output.
4. Interest Rates: Identifies whether the economic environment is characterized by rising or falling interest rates.
5. Trade Balance: Compares a country's exports to its imports, indicating whether it has a trade surplus or deficit.
Regularly assessing these YoY financial and economic metrics is essential for businesses, investors, stakeholders and policymakers alike.
They provide valuable benchmarks for evaluating performance, identifying trends and making informed strategic decisions.
In this section, we’ll delve into how it benefits your business and potential stakeholders and investors.
The first major benefit of YoY growth is that it compares metrics over extended periods.
This exhaustive view of your business performance empowers you to:
Another advantage of YOY growth is mitigating the impact of seasonality on your growth metrics. Comparing similar periods over time lets you discern underlying trends without the effect of seasonal variations.
For example, depending on your business, you could see a sharp uptick or decline in conversions during the holiday shopping season. This season falls into the fourth quarter of the year—between October and December.
Calculating growth on a single month basis can give a false indication of immense growth or decline. That’s because these inflated numbers may return to normal after the holidays.
When you understand these trends, your business can easily adapt to changing market conditions.
By analyzing YoY growth, businesses can identify areas of significant growth or decline. Based on this performance data, you can spot growth opportunities, make strategic decisions and focus on initiatives that scale growth.
YoY growth assessments allow investors to gauge a company’s performance and growth trajectory. Positive YOY growth means the business has an effective business strategy and potential for sustained success. After all, steady YoY growth instills confidence in stakeholders and investors.
Monitoring YoY growth helps stakeholders assess the stability and risk exposure of a business. Consistent positive growth is an indicator of financial health and can mitigate concerns about the company's sustainability.
YoY growth metrics provide crucial information for investors making decisions about whether to buy, hold or sell stocks. When a company has positive YoY growth, it’s considered a top-performing and lucrative investment.
YOY also forms a basis for comparative analysis between companies within the same industry or sector. You can assess which businesses are outperforming others and make insightful decisions about where to invest or how to diversify your portfolio.
Positive YoY growth contributes to overall market confidence in a company. Investors often favor businesses that demonstrate consistent growth, which can lead to increased demand for the company's shares.
To calculate your year-over-year (YoY) growth, you'll need to track several reports and metrics. We’ve highlighted a few of them earlier and now we’ll provide templates to help you prepare your reports or metrics.
The income Statement, also known as the Profit and Loss statement (P&L), provides a summary of your company's revenues, expenses, and profits over a specific period of time, typically on a quarterly or annual basis.
The income statement template below is a valuable tool for calculating YoY growth. It shows how a company's revenues and expenses have changed over time. By comparing the figures from one year to the next, you can assess the percentage change in key financial metrics such as revenue, net income, and operating profit.
When working on your financial sheets, Visme makes it easy for teams of all sizes to collaborate effectively. Team members can edit projects in real time, leave comments, resolve comments and more.
The workflow feature lets you manage tasks and other roles. You can assign tasks, leave instructions, set deadlines and track progress and corrections.
Unlike the income statement, the balance sheet isn’t used as a direct metric for calculating year-over-year (YoY) growth. However, it provides a snapshot of your company's financial health at a specific point in time, including its assets, liabilities, and shareholders' equity.
So, if you’re measuring YOY growth for investment planning and decision-making, the balance sheet is nice to have. It helps you assess a company's sustainability and financial stability.
This template is a great starting point for creating your balance sheet. If you have already created your financial sheets in Excel or Google Sheets, you can easily embed tables within this balance sheet or any of your Visme projects.
Similar to the balance sheet, a debt and financing report isn’t a direct metric for calculating year-over-year (YoY) growth. However, these metrics indirectly impact growth and financial performance.
For example, the interest expense represents the cost of servicing debt. Changes in interest expenses over time can impact net income and profitability, which are key components in evaluating growth.
Similarly, a high debt profile can reflect higher financial leverage and risk. Your debt-to-equity ratio or interest coverage ratio can be indicative of a company's ability to manage its debt. Together, these metrics paint a picture of your financial health and can influence your capacity to attract future investments and scale growth.
Present your numbers in style using this financial report presentation. This template can be fully customized. You can edit content, change images, apply custom colors, input your own fonts and logo and more.
With the brand wizard tool, you can keep all your Visme projects on brand. Just input your URL and the tool will pull up all your brand assets and save them to your brand kit. That way, you don’t need to manually add your brand assets every time you create projects in Visme.
Profitability ratios are financial metrics that measure a company's ability to generate profits compared to its expenses, assets, and equity. These ratios include gross, operating and net profit margins, return on assets and equity and earnings per share.
By analyzing changes in these ratios, you can assess if your company has experienced growth or a decline. Generally, an increase in profitability ratios generally indicates positive YoY growth, while a decrease suggests negative growth or stagnation.
Visualize, track and report your company’s profit margins and ratios using this customizable dashboard template.
You can either share it as an online link, generate an embeddable code or download it in a PDF or image format. Once you’ve published your dashboard, you can track how your readers have viewed or engaged with it.
When calculating your YOY growth, cash flow is a key performance indicator.
Here’s why. Positive cash flow doesn’t only provide insights into your company’s financial liquidity. It also shows your company is able to generate more cash than the previous year from its operational activities and meet its financial obligations.
With growing cash flow, your company will have the financial resources to invest, expand, repay debt and return value to shareholders.
Assess your cash flow growth and business liquidity with this attractive template.
To make your report or financial statement engaging, you can use interactive elements. For example, you can use hover effects or popups to provide more information about your cash flow table without overwhelming your audience.
Competitive analysis isn’t a quantitative metric for measuring YOY growth. But it has made this list because it can inform your growth strategy and indirectly contribute to YOY growth. By conducting a competitive analysis, you can:
Adopting these tactics and getting them right will help your business enjoy steady YOY growth.
Part of competitive analysis is assessing competitor’s fiscal performance data. If you find a competitor with positive year-on-year growth, you can benchmark your performance against theirs. You can even tap inspiration from their successes—whether it’s in product development and launch, marketing or customer success.
Read this article to discover how to perform a competitor analysis. The Visme library also has a rich array of competitor analysis templates you can use.
There are several operational metrics you can use to track whether your business is growing or shrinking. One of the most straightforward ways to measure YOY growth is by looking at revenue. Other key metrics are customer acquisition and retention, churn rate, average order value, active users, traffic or page views and social media followers.
To effectively track and report each of these operational metrics, this operations report template below works as a great starting point.
Alternatively, you can create an operations dashboard that provides a single source of truth for stakeholders.
When calculating YOY growth, you should pay attention to your gross margin. A YOY increase in gross margin can indicate that the company is experiencing growth.
For example, this increase can suggest that the company is generating more revenue from its sales while keeping its production costs under control. It can also reflect your ability to get higher prices for your products or services or negotiate better with suppliers.
A decreasing gross margin might raise concerns about the company's ability to manage costs, maintain pricing power or stay profitable. Increased competition, rising raw material costs, or inefficient production processes may hamper your YOY growth.
Here’s an editable dashboard you can customize to track your gross margin and other YOY metrics.
Your ability to acquire or retain customers is a marker for business growth.
A growing customer base can lead to higher revenue and market expansion. Similarly, a high customer retention rate indicates that your company is successful in keeping customers satisfied and engaged over time.
Satisfied customers are more likely to stay with your company and make repeat purchases. This means your company will enjoy stable revenue and can explore potential upselling and cross-selling opportunities.
But that’s not all. The number of referrals from satisfied customers can boost organic customer acquisition and YOY growth.
Capture your customer acquisition and retention data in your customer service report and share it with stakeholders for effective decision-making.
Beyond creating stunning data visualizations, you can easily import data from external sources to create your charts. Visme supports integrations with Google Sheets, MS Excel, Google Analytics, Salesforce, SurveyMonkey and a host of other third-party tools.
Watch this video to see how the feature works.
Even if you have your graphs and charts in Tableau, you can easily import them into your reports. All you need to do is click on the Media tab on the left panel and then select Embed Online Content. Next, copy the HTML code from Tableau, paste it into the custom HTML code window and click Insert.
Employee headcount is an indicator of YOY growth. An increasing workforce could mean that a company is expanding its operations, developing new products or services or entering new markets.
Employee productivity is also a key driver of growth, as it contributes to cost efficiency, increased output, innovation, customer satisfaction, and the ability to adapt to respond to market demands. Simply put, when you invest in initiatives to boost employee productivity, you’re better positioned to achieve sustainable and scalable growth over time.
Keep a pulse on your company’s employee performance and propel your company towards unprecedented growth with this dashboard.
The year over year growth formula is:
YoY Growth=((Current Year Value−Previous Year Value)/Previous Year Value)×100.
You can either do a manual calculation or use a year over year growth calculator.
Below is a breakdown of this formula and how to arrive at the answer.
Decide which metric you want to measure. Most business analysts use YOY analysis to monitor YOY revenue or net income.
But you can deploy it for other metrics that are relevant to your business goals—especially if they need to be on your financial report. This may include sales, customer acquisition and retention, earnings before interest and taxes (EBIT), net cash flow, average order value (AOV) and more.
Specify the two consecutive time periods you want to compare, such as January 1st, 2023, to December 31st, 2023, and January 1st, 2024, to December 31st, 2024.
Gather the data for both time periods. You can retrieve this information from your company's financial statements, analytics tools, or databases.
Subtract the value of the earlier period from the value of the later period to find the absolute change. For instance, if your revenue was $100,000 in 2023 and $120,000 in 2024, the absolute change would be $20,000 ($120,000 - $100,000).
To calculate year over year growth, divide the absolute change by the initial value (the value from the earlier period) and multiply by 100 to express the change as a percentage.
Using our year over year growth example, the percent change in revenue would be 20% (($20,000 / $100,000) x 100%).
The next step is to interpret your results. Analyze the YOY growth rate to understand how your business is performing. A positive YOY growth rate indicates expansion, while a negative rate signals contraction. You can also compare your YOY growth rate to industry benchmarks or competitors to evaluate your performance.
Create charts, graphs, or tables to present the YOY growth data. Visualizing the data helps you and others understand the trends and patterns in your business's performance. Easily create beautiful and interactive charts, graphs and other data visualizations with the help of Visme.
When calculating YoY growth, it's essential to choose a consistent time frame for comparison. Typically, YoY growth is calculated for a calendar year or fiscal year. Ensure that the time frames you choose are identical for both years to avoid confusion.
Also, be sure to compare apples to apples. The periods for comparison should be similar. For instance, if you're comparing Q1 2022 to Q1 2023, ensure that the dates match exactly. This prevents misleading comparisons due to differences in timing.
Not all metrics are suitable for YoY growth calculations. Choose metrics that accurately reflect the performance of your business, team, or individual. Common metrics include revenue, website traffic, customer count, or product sales.
More importantly, ensure your data is correct, up-to-date, and includes all relevant information. Double-check your data sources to prevent errors or discrepancies.
Outliers or anomalies can distort YoY growth calculations.
These outliers may include one-time events, seasonality, trends, cyclical patterns, disruptions, M&A activities, disposals, data errors, compounding effects of interest and more.
When doing your YOY calculations, identify and remove any unusual data points that might skew your results. This ensures that your calculations accurately represent the underlying trend.
While YoY growth is a powerful tool, it is just one piece of the overall analysis. So when you’re presenting YoY growth figures, provide more context.
For example, you can provide additional insights, such as market size, customer demographics, or economic conditions, to help stakeholders understand the implications of the YoY growth rate.
Another way to provide valuable context is by benchmarking your YoY growth against industry standards or competitors. It helps assess whether your growth rates are in line with or outperforming industry norms.
Evaluating one metric may not be enough. Assessing YoY growth across multiple key metrics provides a more comprehensive view of a company's overall performance. Consider revenue growth, net income growth, customer acquisition rates, etc., to get a holistic perspective.
For each metric, a one-year comparison may not cut it. It's important to evaluate multiple years to spot anomalies, recurring patterns, or unique events that could influence the YoY growth rate.
For a B2B technology service provider, annual revenue growth is a critical metric. Let's consider a company that offers a customer relationship management (CRM) platform to businesses.
A YoY revenue growth of 25% may be attributed to the acquisition of new enterprise clients, the introduction of innovative solutions, and increased demand for cloud services in the business sector. This positive YOY revenue growth may indicate the company is successful in acquiring and retaining clients. It may also indicate an opportunity for the B2B company to expand its operations, enter new markets, or invest in additional resources.
However, if the 25% YOY growth is below expectations, then the company will have to analyze the numbers and identify areas for improvement. This may involve revisiting marketing strategies, enhancing customer relationships, or diversifying service offerings.
While YOY growth offers a more extensive overview of performance, you may also want to look at other time-series data to get a complete picture, such as:
Year-over-Year (YoY) growth is a financial metric used to evaluate and compare the performance of a specific metric, such as revenue, profit, or other key indicators, over a 12-month period. The comparison is made between the same period in the current year and the corresponding period in the previous year.
Month over Month (MoM) growth compares the performance of a specific metric from one month to the next. Alternatively, Year-over-Year (YoY) growth compares the performance of a specific metric in the current year to the same period in the previous year.
Year-over-Year growth measures the percentage change in a metric or value between the same period in different years.
This type of analysis helps you identify trends and patterns that may be developing over longer periods of time, such as seasonality, market shifts or the impact of external factors like economic conditions or policy changes.
On the other hand, year-to-date growth measures the same metrics from the beginning of the current year up until the present date. It gives you an idea of how much progress has been made towards annual targets or goals.
The YoY ratio, also known as the year-over-year ratio, is a financial metric used to compare the growth or change in a particular metric or variable over a one-year period. It is calculated by dividing the current period’s value by the previous period’s value and then multiplying the result by 100.
The YoY concept, also known as the “year-over-year” concept, is a method of comparing data between two consecutive years, starting from the same point in time. The year after year concept is widely used in various industries and disciplines, including finance, business, and economics.
It provides insights into how a particular metric has changed over a 12-month period, helping analysts and decision-makers understand trends, identify patterns, and assess the overall growth or contraction of a variable.
Year-over-Year (YoY) growth is a crucial metric for understanding how your business has performed over time. In this article, we’ve explained how to calculate your business’ YOY growth and the metrics to consider when calculating it.
To help stakeholders make sense of your YOY growth data, you need to assemble it into reports and dashboards. Also, utilizing data visualizations like charts, graphs, or tables helps communicate complex YoY growth data, illustrate trends, and highlight areas of concern.
With Visme’s report maker, you can create different types of annual reports—financial, HR, operations, sales and marketing and more. You’ll have access to reports and dashboard templates, 30+ widgets, 20+ maps, charts and graphs to transform numbers into meaningful visuals.
Ready to track, analyze and supercharge your company’s YOY growth? Sign up to create beautiful reports and dashboards and drive business growth with Visme.
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