How Can You Monitor Your Business’ Health

Reporting has a very important role, as it helps you take the pulse of your business. This is true for all types of teams, but even more so for remote teams.

When it comes to reporting, I’ve noticed a few things that all business owners have in common. Even though I dislike generalization, there are some ideas that stand out.

So here’s a pattern I’ve observed with leaders, in my over 12 years of working with remote companies:

  • They want to be able to make business decisions based on data.
  • They have are looking to have the ideal reporting dashboard.
  • They want to be able to view all relevant business numbers in one location. These numbers help them make rapid decisions.
  • They have a habit of requesting more and more reports or numbers to track. They do this hoping it will better serve their decision making process.

In my experience, reports provide 40-80% of the information needed for decision making. The rest is represented by communication and intuition. However, this can only happen if the right reporting structures are in place and utilized.

Is this a simple task?

It can be quite easy, so let’s look at how to use reporting to your advantage.

Why does reporting seem so difficult?

While working on implementing reporting, you may fall into some common traps. When this happens, reports get to feel like a time drain more than an effective tool.

What are these traps? Some of the most common are:

Over reporting

Over reporting is frequently the cause of lost time, when it should be the other way around.

What over reporting looks like:

  • Reports are more complex than they need to be When reports don’t offer a clear picture at a glance, decision makers simply don’t use them.
  • Too many numbers Reports are confusing when they track too many numbers. This makes leaders hesitant to use them for decision making.

Reporting on the wrong numbers

Another reporting stumbling block is selecting the incorrect numbers to report on.

What to consider if you want to avoid this:

  • Each business its relevant numbers Your business has its own specifics so they should be considered in reporting. Example: B2B SaaS will report on different numbers than B2C ecommerce business.
  • Random reports might be harmful Getting inspired on the numbers to report on from random lists may create more harm than good. You may end up relying on numbers which say nothing about the state of your business.

Reporting for the sake of reporting

Is this report necessary or useful? This is one of the first questions I ask my clients when they request yet another report.

When you don’t have a clear answer to this yourself, ask your teams what do they think about it. Here’s why:

Reporting for the sake of reporting is a consequence of an unhealthy culture in the company. That’s when leaders request reports without check with the specialists first. The problem is that no one on the team brings up the conversation around the value of these reports. The consequences?

  • The team ends up reporting for the sake of reporting
  • Leaders look at irrelevant numbers and reports
  • Time gets wasted and the business suffers

In my experience, you can avoid these traps if you start from the objective of the report.

What can reporting done right tell you

Before you start to build reports, first set goals and targets. This is kind of obvious. If you don’t have enough historical data to use as a baseline, you can also use industry standards.

Of course, you can report even if no goals have are set. Unfortunately, this will not generate valuable insights.

Furthermore, there is no way to assign any relevant action items when you are no reporting against targets. Why? Because you’re missing a direction.

Still, why is reporting done right so important? Because it becomes your reliable source of information! This is the way to quickly find out how well the business is doing. I know how time pressure works for leaders and founders like you. Reporting is also meant to save you time! You see the most relevant numbers right in front of your eyes and you are able to identify issues and fix them.

Let’s build reports together

What are the relevant reports for remote businesses

Yes, there is no one-size-fits-all approach to reporting and there are a few reports you need to know about. My experience shows that the following reports are essential, for all remote business:

Financial Reports

  • P&L (profit & loss) and BS (balance sheet). These are the obvious ones which should be automatically generated by accounting. Here’s how to maximize their efficiency:
    • Keep a close eye on them and make sure someone in your company owns them. This could be you, your Operations Manager, or your Head of Finance.
    • These are crucial for you and your team to look at on a regular basis. Still, I would mix them with other reports to identify and correct issues fast.
  • Profitability per project and / or clientThis is one of the most relevant reports for all small businesses. It is the key to both growth and increased profitability, any owner’s ultimate goal.You use it to ensure your effort and investments have a healthy return. And that profitability is not happening just at company level, but also at a project and / or client level.The information provided by this report helps you make informed decisions. What lines of business will bring you closer to reaching your goals? Which clients do you want to continue working with and which clients should you fire?If you ever wondered what you should do more or less of in your business, this report is what you need!
  • Runway reportingThis report correlates some of the most impactful numbers in your business:
    • The amount of money in your business’ bank account
    • What is on track to be collected
    • Any loans or lines of credit you have available
    • All this versus your monthly expenses.
    Runway report tell you how many months does your business have until it runs out of cash . Unfortunately, very few small businesses look at runway.

As scary as it might sound, without runway reporting your business is operating in the dark. This is because you don’t know when to cut costs, or allocate more resources for development. Even worse, you don’t know if there will be funds for next month’s operations.

I can tell you that runway reporting is one of the easiest reports to put in place and maintain weekly. So what other reason do you need to start with it today?

Talent (human resources) forecasting

Human resource forecasting is a common problem for small businesses.

You try to keep your operations lean and on a tight budget, so you don’t hire until it’s too late. It’s fine – I understand, and it’s exactly what I did many times. But I also learned from painful experiences. I am sure you know what I mean. I am sure you know how it “hurts” when all your teams are stretched, and you already have new projects scheduled to begin. All this with no talent to work on them.

Talent forecasting means to look at your projects and people and align timelines with talent capacity. On top of this, you need to add some buffer. This could be between 5-25% based on your tolerance for risk as well as extra costs

Without talent forecasting you will run into one or all of the following costly issues:

  • Overworked and overwhelmed teams. This brings a high risk of them leaving your company. It can be during the most difficult, high pressure times for all of you, so basically when you need them most. Work actively to prevent this from happening.
  • Fulfilling on projects with interruptions. This is caused by not having the right and / or enough resources in place.
  • Overhead. It happens when you engage resources who are not assigned to revenue producing projects. This is a consequence of poor project planning.

Sales and marketing reports

Sales and marketing reports can be as simple or as complex as you want them to be. But to be honest, I have seen quite often more complicated reports than needed.

Simply put, your sales and marketing reports should help you answer questions like:

  • How do you generate leads for your business?
  • What is the cost?
  • What channels work and what channels don’t?
  • What sales activities lead to closing the deals?
  • What makes a real difference in a higher conversion rate?

Tight and relevant sales and/or marketing reporting structures are critical for a small remote business. Why? Because:

  • Sales and / or marketing can eat up a lot of resources without immediate return
  • Not reporting on sales and marketing means spending money without knowing what works and what doesn’t
  • Reporting bring focus on what generates results. This translates into better conversion rates and a lower cost per acquisition.

Now that you know what are the types of reports you need for your remote business, let’s see how to turn this into action.

How can you set up reporting?

The ideal situation, if you ask me, entails the generation of automated reports. It’s even better if you can do it using tools you already have in your business.

My main tips and trick on reporting can be summarized as follows:

  • When it comes to financial reports, the basic P&L and BS are a must for all professional accounting software.
  • You can track profitability per project with a time tracking software. Of course, correct setup is assumed.
  • Custom built dashboards, KPI reports, or scorecards offer a variety of options. They aggregate data from various areas of the business.
  • A company scorecard displays data from all major departments of a business.
  • The main benefit of these types of reports is 100% customization. But it comes with a downside as well – if it’s not well thought it can turn into a time drain for whoever owns the report.
  • The reality is that combining the two approaches works best in my experience:
  • Rely as much as possible on tool generated reports.
  • Add these reports into a custom built reporting dashboard, together with other data.
  • This way, you leverage technology, which means less time spent and lower costs. At the same time, you consider the specifics of the business and customize reports accordingly.

Final thoughts on reporting structures

I can assure you that most leaders struggle to find the ideal reporting structures. But that doesn’t mean you can’t find a workable solution to support your decision making process.

Set your objectives and targets and build the good enough reports to help you track progress. Find opportunities to improve them in time.

I want to monitor my business’ health!

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