Beata Leyland
Business Owner & Author of this article & Former Financial Controller
Your goal is clarity and simplicity in reporting. All reports are there to help you, and all of them are somehow interconnected so the more you see the better business owner you will be.
Intrigued ?
When you run a business daily you absorb, analyse, and make decisions based on data.
Inventory, sales figures, trends, and financial reports all help you to better understand where you are, what is possible, and how to move forward.
Although I am excited to see how AI helps us with data-driven decisions, I also know that methodology is the key to how these figures are pulled out, organised, and defining what our goal is.
I’ve written key base lines of methodology in the article about reporting, and here I will focus on how to read results of reporting as we are the end decision makers of what to do based on the data.
Sales report
This report shows you what was sold, how the company is doing, what can be improved, and in which direction to go.
It’s important not only for the IRS but for your growth.
Based on these figures you will know how much to spend on inventory, how to re-direct your marketing, and what to do with your revenue.
Data can be extracted out of your system, spreadsheet, online software or based on physical inventory.
No matter what you choose, the most important is accuracy and your strategy of growth.
Sales report shows not only company revenue, leads, conversion rate, client behaviours, and trends.
It greatly helps with evaluation of forecasts and improvements.
Thanks to the sales report you will be able to develop a strategy.
What’s your value?
Who are you?
Who is your client?
How you generate leads?
How you catch clients from leads?
How can you create an irresistible offer?
Profit & Lost Statement
This one can be confusing the first few times, but overtime it is intuitive to read.
The goal is to show revenues, costs and expenses over a period of time.
EBITDA = Operating Income + Depreciation + Amortization is a parameter showing you profitability of the company
Negative EBITDA means a company’s core operating revenue isn’t enough to cover all expenses, positive one in general is a good sign however Cash Flow report would be needed before making major investments.
Thanks to EBITDA you can see from the first glance how well your company does.
Trends
Observing market trends and your competitors can give you a lot of knowledge in which direction you want to go.
All businesses operate in some kind of system, so seeing how that system evolves and what you can add is a key.
These data should give you inspiration and hints as they are based on predictions rather than facts.
It can also be a great reality check if your strategy could be attractive for clients.
Trends show competitiveness of the company, showcase future opportunities, show how a company is doing now and what can be alternated to create a good ground for the company to grow in the future.
Before analysing a report, make sure data used as a comparison makes sense as many of AI tools aim to help, but as of now might further confuse you.
Trends are changing, so are you and your competitors, so bear in mind part of your data will be a prediction not hard facts.
I’ve came across a really great conclusion mentioned at a conference that well–known SWOT analysis ( Strengths and Weaknesses, alongside external Opportunities and Threats) should be changed to Strengths and Weaknesses, alongside external Opportunities and Trends.
Why?
Because trends show you opportunities.
Customers have their habits and competitors have their relationships.
You need to know how to stand out at the beginning.
Cash Flow
Shows you how and where you should spend company money.
You can see money coming in and money going out.
Based on ratio it is very easy to see what you can afford, how you should invest your time, money and resources.
Cash flow informs about company liquidity, solvency and overall health.
A report captures a specific period of time, that’s why it is important to always compare it in the perspective of the year to make sure we have enough for December if this month bills are due earlier.
Inventory
To run enterprise smoothly we need to have enough raw materials and products so our operation can generate revenue.
For some companies it means a few weeks ahead, for some months, for some years.
If you know that you sell 400 bottles of perfumes every month and manufacturing lead time is 8 weeks you need to have enough inventory for at least 2-3 months ahead to not run out of stock.
If your marketing campaign is very aggressive than 6 months ahead would be even better to cover the increase of sales.
Thanks to the inventory report you can also see (if you are a manufacturer) which ingredient is used the fastest to always have more, which area of production causes you the most loss (maybe a workshop from your employees or sharing know-how would help).
It’s up to you how you run the company, and what your goal and strategy are.
Data are there to help you make better decisions and more realistic plans and mitigate risks.
Be critical towards reports, ask questions, understand the core of reporting to make sure your moves are made based on real figures.
Your goal is clarity and simplicity in reporting.
All reports are there to help you, and all of them are somehow interconnected so the more you see the better business owner you will be.
If you are searching for someone who can help you with reporting,
teach you how to read reports,
and
how to analyse your data just book a consultation for free!
We can not only execute reports for you but also save you time with analysing them.
