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How Was 2009? Create An Annual Report for Your Business

January 6, 2010 at 5:00 pm | Posted in New Haven Tech and Start-Up Events, Uncategorized | Leave a Comment

At the end of every year, especially a year like 2009, lots of people are looking for some egg nog, an easy chair by a fire, and perhaps, some distance from their work. I’m all for that – but when you come back from decompressing, it’s often the right time to revisit that year you just completed.

After all, if you’re in a startup or small business, you likely spent long hours and lots of blood and sweat achieving things.  It’s important that you have a realistic perspective on what you did, and how it informs the coming year.  It can be very easy for entrepreneurs to be overly optimistic, and at other times overly pessimistic.  So perspective is a valuable thing to invest in.

It may seem a bit daunting to write your own annual report – if you pick up one from a publicly traded company, you may go cross-eyed.  But even if your degree wasn’t in Finance, business planning, even financial planning, is important, and you should take a run at it.  Again, there’s a lot of value in perspective.

Here’s a 5-step process you can follow.  You can get fancier, but these are the basics.

1. Remind yourself of your vision. Why is your business around in the first place, and what do you hope to achieve long term?  What kind of company do your see your business being?

2. Crunch the numbers. If you use QuickBooks or a similar kind of software, you may find that this is fairly easy.  Still you don’t have to have tracking software to put together numbers.  And don’t rely just on the canned reports provided, but assemble information that tells you a meaningful story about last year.  Key questions:

- How much revenue did I bill?  What did I collect?

- What were my expenses?  What was my resulting income?

- How quickly did I collect on my invoices?

- How many widgets did I make, sales did I win, etc.

You can probably think of a thousand other questions about your business – and you may find that unanswered questions lead you to track some new things in 2010.

3. List last year’s actual accomplishments. Crunching the numbers doesn’t always tell the story of what you achieved.  A lot of times a bullet point format, however, does the job just fine.  For example, if you run a lemonade stand:

- Made 5,000 servings of lemonade

- Found lots of new friends (50) in the neighborhood

- Created a stand that I can use for next 10 years

Of course, quantifying is always helpful.  It gives you a much clearer idea of the accomplishment.

4. List next year’s desired accomplishments.

Well, I think this follows pretty logically – what is the bullet point list of accomplishments you want to see in next year’s report?

5. Create a plan for next year.

Create a financial picture (using last year’s numbers to help with estimation) and action plan based on what you want to achieve in the coming year.  A resource that may help you here:

http://www.smallbusinessnotes.com/operating/finmgmt/financialstmts/financialratios.html

Planning out your Sales, Income, AR Cycle Time, Major Budget Categories – all these will give you a better visualization of what you need to achieve in 2010, and will spark questions which will help you create an action plan for 2010.