The Only Report You Need to Run a Successful Business And the best part? It won't cost you anything extra and it'll be available in a Flash.
By Gene Marks •
Opinions expressed by Entrepreneur contributors are their own.
I've been working with clients for over 20 years and, without question, the most successful of them rely on data to help them run their businesses. But you may be surprised with where the data comes from.
It's not from a financial statement. For a small-business owner, financial statements are generally useless. They're prepared months after the fact. They show a snapshot from a historical period that is usually long past. And they've been jiggered and reconfigured by accountants to reflect accounting standards that usually don't have much connection to the real world for most of us. Banks and investors may look to financial statements as part of their documentation to approve financing. But smart business owners don't. Instead they rely on another report. A daily report called The Flash.
Related: Use the Metrics That Really Matter in Your Business
The Flash Report is also a snapshot. Except it's a daily snapshot. Its one page contains on it the most critical information that a business owner needs to run his or her company. What kind of information? That depends on your business.
But the core numbers are always there: cash in the bank, open accounts receivable and accounts payable, year-to-date revenues. Then there are other numbers that are particular to the business owner: year-to-date purchases, overtime that week, open orders ready to be shipped, backlogged orders, forecasted sales, machine hours that week, billable hours that month, Facebook likes, returns or complaints or leads generated that week.
You should know the numbers. These are the numbers you need every morning so that you have a pulse on your business. If you can't tell me what these are right now, then consider this a wake-up call.
This is not something an accountant needs to prepare. Most of my clients have an administrative person take ownership of the daily Flash Report. They are taught where to gather the information. Some will come from your accounting system. Other data will come from your customer-relationship-management or service databases. Your warehouse manager may need to email a few numbers from his or her spreadsheet. Maybe it's coming from one of your social-media websites or another cloud-based system you're using.
This is not an accounting exercise. It's an exercise in bringing together data onto a single page of information. Once it's done a few times, it usually only takes a few minutes every day to complete.
Related: A Simple Guide to Understanding Your Profit and Loss Statement
The report should be simple. No graphs or charts. No complex systems. Most of my clients either get a piece of paper (remember those?) on their desk each morning with the numbers manually written or typed, or they receive a very simple, one column spreadsheet via email that can be quickly scrolled through. There's no need to buy expensive "business intelligence" software or other nonsense. Not that these applications aren't valuable and can provide more detailed information for the manager that needs it. But you? You're a business owner. You need the executive summary in an easily digestible format. That's what a good daily Flash Report does.
Benchmarks are always needed. How do you know if your cash balance is good unless you compare it to what you had at the beginning of the year? How do you know if your year-to-date sales are ahead of last year's unless you were shown what last year's year-to-date sales were? How do you if your backlog now is as strong as it was the same time a year ago?
A daily Flash Report is useless unless you've got something to compare. So whoever's preparing this report needs to dig out prior period data to show alongside the most recent information. Each year, as long as you're keeping each day's report on file, this gets easier and easier.
You know that your systems are not like the big guys. You can't just generate a reliable income statement at the snap of your fingers. You don't have a team of internal accountants that are keeping a close eye on your finances. But the good news is that, because you're running a smaller business, your needs aren't as complicated. In the end, no matter what business you're running, a business is a business, so a simple one-page daily Flash Report is usually enough for anyone to keep their eye on the ball.
Related: 3 Key Questions Small Business Owners Must Answer, or Risk Failure
