Define report,how to prepare a management reports
Answers
give a spoken or written account of something that one has observed, heard, done, or investigated.
Step 1: Starting with the End in Mind
The first step in creating management reports is starting with the end in mind. Before you start producing reports you think you need, you should ask yourself questions in order to find out what you really need.
What are the key drivers of your business?
How do you define success?
What do you need to attract customers?
How do you know if you are pricing your jobs right?
Do you know when to hire/fire employees?
The answers to these questions help define critical success paths for any business.
Step 2: Setting Goals and Creating a Budget
After you determine the drivers of your business, the next step in the process is setting goals and creating a budget for your company. Creating goals and a budget that you can compare against expectations can separate the best companies from the ones that are just getting by.
When GrowthForce takes on a client they often ask us how we think their business is doing. We look at their P&L and say “it depends… what did you expect was going to happen?”
Some companies think if they have $100k in profit it’s the end of the world. They were used to seeing million-dollar profits and the company’s investors aren’t going to be happy with a $100k. On the other hand, we have companies who say “I’ve got a $100k! That’s amazing.”
It really depends on what your expectations are, which helps determine your budget and goals. Creating a forecast, budget vs. actual, allows you to analyze specific areas of the business, i.e. sales, labor expense, indirect vs. direct, and helps in achieving your company’s goals.
The forecast then needs to be entered into your software, i.e. QuickBooks, and set your reporting format to provide the variance analysis you need to effectively manage your business.
Step 3: Getting the Right Management Reports for Your Business
The final step is determining what type of management reporting your company needs.
Reports cost money. They take people’s time to create and it takes other people’s time to review them. Sometimes reports get generated because someone asked for them but no one ends up looking at them and they aren’t helping make decisions. Making sure the management reports that are created serve a purpose for your organization is vitally important to avoid wasted time and money.
Your business needs can change and therefore, your management reporting requirements. Your business goes through many changes in sales, people, customers, etc. and you need to assess the reports that you are producing.
First, ask what reports are you generating? Then answer these questions:
Who is getting them?
What is the frequency of the report?
Does the person who gets the report know what to do with it?
What decisions do you make with the report for the running of your company?
The goal of management reporting is to provide insight into your business including helping you know where to focus your attention.