Spring Clean Your Business and Get Moving

Thomas Taylor - Sunday, September 18, 2016

If someone wants to buy your business you have to make it easy for them to quickly assess if the business is what you say it is. But if you're happy working and running your business its makes sense to make sure your management accounts help you as well. Most people use a bunch of resources getting their bookkeeping done but don't get that final, most useful, part: helpful reports.

Firstly you should always aim to get clean and tidy management accounts that clearly show the performance of the business. If your P&L is over two pages long and filled with minutiae or strange classifications you're going to make it difficult for anyone to see what's going on. Make sure your management accounts agree with your accountant's year-end reports and that your balance sheet is up-to-date. So make sure the books are shipshape.
Management reports have to commutate information that has many dimensions. People take in information in different ways.
 
When you set out numbers there are some simple rules to follow that can help make it easier for people to take numbers in.

Comparing how performance changes, mostly over time, is best done from left to right: usually months, quarters, and years. Explaining how performance might be controlled is best done in a logical way from top to bottom.
 
For example: Price x Quantity = Income, Less expenses = Profit.

Aim to keep it on one page by detailing the most important items and summarising less important, or fixed, items into logical groups.

Don’t have long lists of numbers together in any one section; advertising has nothing to do with bank fees unless you run a bank.

Often information should be subdivided between offices, product lines or market segments. Sometimes the best way to do this is with a separate page for each, sometimes a comparison table on a separate page.

The main thing is to make sure the first page is Simple. The first page should be a summary page that ties it all together. Use exactly the same format for each page so people can easily compare one page to another. Ensure that the subset is clearly marked at the top of the page.

It’s critical to keep in mind your audience and what the information is to be used for. For example strategy and housekeeping should usually be kept separate.

Try also to not reinvent the wheel every few months; you want any discussions to be about the business not about the numbers themselves.

Finally some formatting tips:
- Remove distractions such as gridlines and boxes
- Use lots of white space
- Use colour sparingly, keep it to one or two coloured fonts
- Unless you’re a natural designer try not to use bright colours or highlighting
- Use bold and underlining sparingly
- If it fits on one page but the font is tiny start again

In short keep your reports clean and elegant.

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