What is Management Reporting
What is Management Reporting
Most people I know are keen sports fans of some kind or another. They regularly track the performance of their favourite team against their expectations or even their fantasy teams. Yet it is surprising how many business owners actually neglect to do the same.
Over the years, I have spoken to several business coaches and accountants who categorically state that if a business is to thrive then they must review their business progress on either a quarterly or monthly basis.
The reverse will also apply – those that struggle and go under usually spend minimal (if any time) on these processes.
Generating this information is called “Management Reporting”.
You may suggest that your accountant produces your accounts every year and it can constitute management reporting. I would say categorically say that it is not – as:-
- Your accountant will produce information which is often a year out of date – to keep ahead of your business you need info which is created monthly or quarterly.
- returns will lack the detail that you require to analyse your business effectively. For example the accounts will show only the annual turnover that has been made – not your monthly turnover
A Management Reporting Pack
So where to start ? The simplest way would be to make a list of questions that you would like to answer about your business and then gather the information that can help you answer these questions:–
- How much turnover do I generate in a month ?
- Who are my biggest customers ?
- What do I spend on overheads ?
- How long do my customers take to pay me ?
You can set up a Management Reporting pack in an excel spreadsheet and modify it over time. You could consider having a seperate tab for each months activity and then a summary sheet that gives you a high level overview. This information could be displayed on a graph. A simple graph showing your actual sales versus your expected sales can be a real eye opener.
As you become more confident, you can develop the spreadsheet and even consider automating it. I remember one of my first clients who used to take 8 hours a month trying to reconcile the actual business activity with the expected. I managed to redesign the management reporting spreadsheets so that it produced all the information automatically.
My client said that as well as saving him 8 hours a month, it also saved the business and probably his marriage . He could see how his busness was performing and was able to take rectifying action within a matter of weeks.
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