Apr 16 2007 by Jason

Board Package Series – Business Reporting

In our continuing series of creating effective board packages, we now turn to business reporting.  Chris, you have the floor…

This is the stuff that most CEOs think of when they think of board reporting packages—financials, departmental overviews, etc. And this stuff is indeed a core component of any good board package, because the more you include this in a board package, the less time you need to spend “reporting” on it and the more time you can spend discussing the implications of it on the business.

Examples of typical monthly board reporting include:

Company financials – I like to see prior month, quarter to date and year to date actual financials (as well as comparisons to your budget) along with a rolling 13 month P&L by month and an A/R aging summary. I also like to get company financials in Excel format (in addition to what’s included in the board package) since that lets me reformat and play with the numbers to get a better sense of what’s going on;

Financial performance guidance – for the next month/quarter/remainder of year. Being able to project your company’s financial performance obviously requires a certain level of maturity in your business, but this is a good way to make sure that financial reporting isn’t only about looking in the rear-view mirror;

Key operating metrics – i.e. the non-financial metrics you and your executive team use to judge how the business is doing;

Sales/biz dev pipeline report – including accompanying narrative on what deals were won, what deals were lost (and why), where sales efforts seem to be stalling out, what progress has been made on key deals, etc.;

Product/technology development updates;

Administrative and HR updates – current headcount by department, hiring plans for the upcoming month/quarter/year; and

Current Capitalization Table – (with sufficient shareholder detail for it to be meaningful). It may seem redundant to include a cap table in each board package when a company’s capitalization typically doesn’t change frequently, but remember that many of your board members sit on multiple boards and work with a lot of companies. Since capitalization often plays an important role in a lot of early stage company discussions (such as upcoming financing discussions, option grants, etc.), it’s helpful to just get in the habit of including it in every board package.

Depending on the stage of your company, this “reporting” section may be more product/technology oriented (as it would be in an earlier stage company) or may be skewed more towards sales and business development (if your company is at the critical go-to-market stage) or may emphasize financial reporting (for a more mature company). Most board reports should include departmental updates for all of your company’s departments, but the granularity/depth of those updates will vary depending on what’s going on in your business.

All of these types of reporting are very important, but to reinforce something that Chris brings up the “why” is just as important (and sometimes more) than the “what.”  Be sensitive that these reports aren’t just history, but lessons learned and that the executives who head up the functional areas understand and agree with the board on the metrics that are used to judge success.