"The most powerful person in the world is the storyteller. The storyteller sets the vision, values and agenda of an entire generation that is to come." — Steve Jobs
What I love about financial statements (and numbers in general) are the intricate stories they weave about a business.
Revenue falling over the last 4-5 years? Maybe an industry problem, maybe competition, or maybe marketing efforts are running dry.
Gross margins declining? Sounds like pricing and efficiency are going the wrong way.
Interest expense ballooning? The company must have borrowed more money. What did they spend it on?
Behind every single number (output) in your business is a story about something happening (input). Finance and accounting are just outputs from all of your operational inputs.
Why is storytelling important?
Have you ever struggled to articulate what's going on at your company or where you're headed next? It's because you don't have a firm grasp of the story.
The best use cases for your story:
Banking — when it comes time to get a new loan, refinance, or update your lender for the year.
Raising money — starting a new business and raising from friends and family, whether a loan or equity.
Rallying your team — if you want your team motivated and rowing in the right direction.
Figuring out what to do next — no one is there to tell you what to focus on; a clear story makes steering the ship easier.
How do I find my story?
Let's break it down using the core elements of storytelling:
Plot (where you've been) — the chain of events. Example: we grew quickly for years until two new competitors entered the market; since then things slowed.
Character (the hero) — your adventure, goals, dreams, ambitions. No one starts a business without a dream of some kind.
Conflict (the problem) — all stories have a problem. Even when things go well, the problem might be simply continuing to make progress.
Change (the transformation) — we change or transform to overcome the conflict. Revenue declining? Install a sales system and hire a team to run it.
Setting (where it takes place) — which markets, niches, product lines, and channels you are going after. Get granular with it.
Theme (the meaning) — this is your "why." It's hard to win in business without purpose or passion.
Much of this feels "fluffy" or intangible, but I promise it will help you connect the dots between your business and the underlying numbers.
So how do you use this from a practical standpoint?
You'll need both a long-run and short-run view of the numbers. Think 5-7+ years for the long-run and about 18 months for the short-run. Business cycles span multiple years, so we need enough history to see the ebbs and flows.
Look at revenue, margin, and earnings trends on your P&L, and cash, total asset, debt, and equity trends on your balance sheet.
From there, start connecting the dots with the tangible activities.
Example
How about some live ammunition. I've been following media stocks for years, and with Netflix set to acquire Warner Bros., I'm intrigued by companies in the industry, namely Comcast.
Below is a 10-year snapshot of Comcast financials from 2016-2025 with select key events highlighted for reference:
Thanks to growing broadband and theme parks, revenue grew steadily from 2016-2021, around 8% per year. Things slowed from 2022-2025 as AT&T and Verizon entered the market and cable TV kept declining.
We see a big acquisition in 2018 that raised debt, but they repaid a good chunk from 2018-2023. And right as the business slowed in 2022, they started distributing more cash to owners, while borrowing to do so.
Comcast seems at a crossroads: growth is slowing but cash flow is still very healthy. Perhaps the shift to heavy dividends is leading to underinvestment, furthering the slowdown.
Homework — have you ever looked at a complete multi-year view of your business? If not, now is your chance. Give it a try with your numbers and see what you find.
When I invest in a public company, I review no less than 10 years of financials to get a complete understanding of the business and its trends. You should too.
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Colin King, CPA, CFA
CEO, Profit Mastery
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