6 Monthly Reports Every Small Business Should Monitor
Small business owners, especially those who are just starting out, must maintain a tight check on their company’s financial health. Financial and marketing reports may be reviewed quarterly by mature firms. Monthly reporting, on the other hand, is typically a more appropriate approach to gauge progress for small firms.
Monthly reporting may provide insight into your pricing, marketing campaigns, staff productivity, and growth. Business leaders may use this data to make smarter decisions about large purchases, debt leverage or repayment, and expanding to new locations or verticals.
Profit and loss (P&L) statement
Your profit and loss statement, also known as an income statement, displays how much money was generated, how much was spent, and how much profit or loss was made throughout the month. Your revenue must surpass your costs in order for your business to prosper. Checking this report once a month will tell you if you’re on pace to meet your expenses and make a profit.
Some company owners review this report every quarter, but by analysing your costs and sales on a frequent basis, you may better understand how little adjustments to your operations affect your financial performance. If you’re losing money month after month, it’s a warning that something has to change.
Balance sheet
A balance sheet shows the assets, liabilities (such as loans), and equity of your organisation. Monthly balance sheet review provides a picture of your company’s financial situation at a certain moment in time.
“You may discover trends and make better educated financial decisions by comparing balance sheets from month to month and year to year.” You’ll also be able to track the important financial measures that lenders use to assess the health of your business: liquidity and leverage.” Lendio penned
Balance sheets may assist you decide whether to buy a costly piece of equipment, when to repay a debt, or when to go public with your firm.
Cash flow statement
Cash flow statements, like balance sheets, are a key sign of financial health. A cash flow statement shows how your cash and cash equivalents have changed from month to month. It accounts for cash flow using the cash foundation of accounting and divides it into three categories: operating, investing, and financing.
If your cash flow appears to be sluggish — for example, you have more money going out than coming in — you may want to consider interim borrowing or cost-cutting.
Accounts payable and accounts receivable
Keep track of your payables (AP) and receivables (AR) (AR). These two reports show you how much you owe and how much you are owed. Record-keeping, cash flow management, and compliance are all aided by tracking your AP and AR. Monthly reconciliation of these two accounts ensures that no bills are missed and that your clients and partners pay you on schedule.
Marketing engagement
Monthly assessments aren’t only for financial reporting; they should also include tracking your marketing outreach. Check the native statistics for Facebook, Instagram, and any other channels you use to reach potential clients to see how well your social media efforts performed. Google Analytics and your email marketing tool can also help you figure out what is and isn’t working.
Customer loyalty
Customer loyalty isn’t measured in a single report, but it’s essential accumulating critical indicators every month to see if your company is maintaining or churning new consumers. Make a report that includes critical indicators like:
- Customer retention rate.
- Negative churn.
- Net Promoter Score®.
- Customer effort score.
- Purchase habits.
- Referral traffic.
- Social media mentions.
Some of this information can be discovered in your POS or loyalty programme. Your marketing analytics will provide more data. Because it costs five times more to acquire a new client than it does to keep a current one, you’ll want to keep track of whether your consumers are happy with your product or service.
Bottom Line
The most important thing to remember is that you must check your company’s financial records. Yes, reading these reports may be a hassle. Even yet, the only method to track how well your organization is going is to analyze the financials.
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