Board reporting is something that every startup does, especially after completing a large fundraise. Usually it comes around Series A, as the investors who have invested in you startup take board seats and try to understand things better from a financial perspective.
This is where you present information from different departments like the sales department, or the customer service department. For the purposes of this article, we are going to be discussing your Startups Finance department, and how that ties into your board reporting.
WHAT IS THE NATURE OF THIS MEETING?
The first thing you need to ask yourself is what exactly is the nature of this board meeting? Or why exactly are you meeting with your investors? There could be various reasons.
You could either be presenting a new budget. It could be an annual budget for next year, for next quarter, or for the next few years.
It could be the end of the quarter and you want to show how this quarter went compared to how you thought it would go.
Or maybe you presented one budget and now you need to re forecast due to some changes in the business.
Understanding the intention of this meeting is going to shape the data that you present.
COMPARE ONE PERIOD VS ANOTHER
I like to start off by going over a high-level summary of the most important KPIs, showing one period compared to another period.
We could compare quarters like Q3 versus Q1, or maybe Q3 versus Q2. Or we could compare months, like August versus July or August 2021 versus August 2020.
Having a comparison is a good way to show trends, and hopefully the graphs are going up.
BUDGET TO ACTUALS
After the financial summary, I like to go over a Budget to Actuals. This is one of the most important reports that you're going to show to your board.
Budget to Actuals allows your board to see how well your company is tracking against the budget. This report helps your investors gain confidence, or hopefully not lose confidence based off how well you're tracking against that budget.
In the example shown above, this company missed revenue by 80% due to only hitting 10,000 of their 50,000 that they budgeted. This can be rectified, only if its tracked efficiently, through a Budget to Actuals report.
You can also customize this report according to what’s most important to you.
After going through your income statement, you can show a few metrics related to cash. How much cash did the company burn during this period? What's the ending cash balance? Other metrics that you can include are Runway, Headcount, Total Customers, CAC, LTV, etc. Most importantly, you should be including the financial metrics that you feel tells the story of your business.
3 FINANCIAL STATEMENTS
After that, I like to cover the 3 financial statements that make up any business, which are absolutely pivotal to any budget:
1. Profit & Loss statement
2. Balance Sheet
3. Cash Flows
In this example, we're only showing what happened during this period.
But you could show it on a rolling basis where you have your income statement, showing the Actuals and then a split for where the projections take place.
You could do this for all your other statements as well; the key is to provide some sort of snapshot.
PROVIDING NOTES & COMMENTARY
It's also important to understand whether you'll be presenting at this board meeting or if you will be sending the slides in advance.
It’s also very common to send a board deck to your board before the actual meeting.
Once the meeting is over, you may want to include some helpful notes on what exactly happened beyond just the numbers that you're seeing over here.
For example, here you can just include how churn was affected, what happened with your hiring or technology and services, and then another way to present your financial summary as well as your year-to-date information.
So, to sum things up, you'll want to start with a financial summary showing one period compared to another.
Then you can go over your Budget to Actuals, explaining what you hit on and why you missed on the things that you missed on.
Then you'll want to go over your three statements, either just showing Actuals or also showing your rolling forecast after that.
Josh Aharonoff CEO and Outsourced CFO
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