Do you know who your most profitable customer is, what your sales drivers are or how staff productivity could be increased?
Wouldn’t it be nice if there was a way to take the guess work out of where your business stands at any point in time, and have peace of mind about its financial health? Is that even possible? Well, with management reporting you can get peace of mind, knowing you will have access to information that can help navigate the ups and downs of running a business [and more importantly keep it on track strategically].
What can management reporting do for you?
Having robust and targeted management reporting helps develop an understanding of the current, past, and potential future performance of the business. Being able to recognise patterns and have context behind the numbers will help you make better, more informed decisions with confidence.
To get the most out of the reports, they are usually prepared on a regular basis such as monthly or quarterly. This will enable the business owner or management team to get the most out of tracking performance.
For example, when things aren’t going right, you are able to implement corrective actions to ‘stop the bleed’ before it makes an impact. This could include reviewing staff efficiencies, inventory mix and pricing effects, cashflow, and working capital.
How to get the most out of the management reports
1. Plan + produce
Management Reporting will be different for each business, and each department within the business. The metrics included can be unique to your operations, industry, and strategic plans. The beauty of this style of reporting is they are internal so they’re not regulated by specific standards and can be as simple or customised as needed.
Deciding on what you want to report on can be a bit daunting. Start with the end in mind. Knowing what your business goals and stressors are can help provide direction for your management reports.
Ask yourself …
“What [about the business] keeps me up at night?”
“What does success look like to me and my business?”
“Am I clear on how we measure performance?”
Once you have an idea on what questions you want answers to, then budgets, goals, and Key Performance Indicators (KPIs) can be created for comparison. From here, it is a matter of working backwards to create drivers, queries, and custom filters in your raw data. When all the planning and workshopping has been done, a management report template designed to give you those all-important answers will be established.
2. Action + adjust
Now you have a plan and have built amazing reports…. what’s next? Even the best reports are useless without action.
- Start producing the reports on a regular basis!
Normally this is a monthly or quarterly basis, but it all depends on your situation. Checking in regularly will help with recognising patterns, providing feedback, celebrating the wins, and get on top of the bad before it is too late.
- Do the prep work!
These reports require current and accurate data. Simple things such as having all invoices and bills entered, the bank reconciliations up to date, and applying tracking categories, will make for good quality reports.
With the vital intelligence gained through management reports, decisions regarding strategic direction and operating efficiencies can be implemented with more confidence. We call these Better Business Meetings. These meetings are used to cement the understanding, promote discussion regarding strategic and financial direction, and hold the business owners or management team accountable for their actions.
Sometimes these discussions lead to a change in the existing reports. The goal is for the reports to be insightful. So if your questions about the business change and the reports are no longer providing answers to your questions, then it is ok to adjust the analysis to be more relevant to the current or future business situation. A perfect example is the current Covid-19 lockdowns. This may mean adjusting the current budget to reflect the impacts of closures or concessions, as well as having more of a focus on cashflow forecasting.
The move to cloud-based software, has generated a new way of delivering on Business Intelligence. With real-time access to data, the ability to produce management reports with automated and data analytics technology has been a game-changer! Some useful platforms like Syft, Spotlight Reporting, Fathom and even Xero itself have paved the way but there are many more out there depending on the business requirements. Using these platforms, you and your trusted advisors can now transform data into actionable insights that inspire strategic business decisions. Watch this space for more info on automated data analytics!
We are here to help. Get in touch with us if you need a hand creating a plan, preparing reports, implementing automated tools, or want to bounce ideas around in a Better Business Meeting. Send us an email at email@example.com or give us a buzz on 1300BDEPOT.