Usually, companies & non-profit rganisations prepare an annual financial report for the benefit of their stockholders & donors, respectively. This report charts an entity’s progress over the span of the preceding year. Small business owners like you can also benefit from doing so. Here is how to prepare an annual performance report.

Preparing annual performance report is not at all difficult if you have already compiled data using dynamic online accounting software. Yes, the process is lengthy, but, a proactive owner like you takes pain in updating business’ financial transactions regularly. You may also seek professional assistance from an experienced accountant.


Financial Performance Report Using Accounting Software

The annual performance report is a financial document that depicts your business’ investments, earnings, charitable donations, and other financial numbers. You should do well by relying on a system like Snoww Books to glean accurate financial data for putting together the report’s financial aspect. You should also use the report to share your company’s vision with your backers, the shareholders.


Start by Preparing Financial Statements

You will need to prepare various financial statements for your business like:

  • Trial Balance
  • Balance Sheet
  • Income statement or Profit & Loss statement
  • Cash Flow statement*

*You can use Accounts receivable & Accounts payable reports generated by Snoww Books to prepare the Cash Flow statement.

The complexity of the annual progress report depends on the intricacy of financial layers and the size of your business. A business with layers of investment and multiple departments will necessarily have to burn the candle at both ends to prepare such a document accurately.

In addition to financial reporting on the state of the business, an annual progress report may include:

  • CEO’s letter
  • Details of CFO and/ or Manager
  • Success stories in the form of Case studies
  • Company’s plans

Create Business Defining Mission Statement

You could use your company’s annual progress report to attract new investors. You could do it by creating easy to understand mission statement.

Include specific info relating to your business objectives and the chosen model in the mission statement. Make sure that it covers the company’s domain, niche, technology, position and,

  • Reasons for your company’s existence
  • Purpose; and
  • The way it operates
  • The way it makes money

Table of Content

Create a page for the Table of the Content (TOC) if your annual performance report is a long document. Having easy access to the topics and their corresponding page numbers will make it easy for the readers to navigate through it. Create its easy to navigate digital copy by linking the content appropriately. Make sure that the link works as intended.


Add Executive Summary

It is always a good practice to add an executive summary to a large document. It is the condensed version of the report giving the company’s final earnings, growth prospects, contributions to charity, and investments. It is useful to the future & current investors in taking in key performance details at a glance.


Cover Business’ Key Financial Metrics

Make sure to cover every financial aspect of the business while preparing the annual accounts, including total earning. Take it as an opportunity to highlight your long-term growth plan for the business. Do not be worried if your strategies damp down your immediate yield a bit. Nosy investors will surely make sense out of your long-term goals.

Include business’ key financial metrics in the annual financial report:

Balance Sheet – It reconciles cash in hand & outstanding invoices against business’ outstanding invoices from the previous year, mortgages, debts & its net worth. It may turn out to be in negative. However, it is not a cause of worry.

Income or Profit & Loss Statement – It aggregates billable against business’ expenses and shows its net income over the previous year. It depicts a positive number and business growth over the year. Put business’ revenue in the left column of the chart and expenses in the right. Subtract the total of the right column from the total of the left.

Cash Flow Statement – You could try and build investors’ confidence in your company by showing the value and strategy behind the investments made in its name. Prepare cash flow statement that shows the company’s taxes, interest paid, and capital investments and money earned by it.


Prepare Easy-to-Understand Graphs and Charts

Make your business’ financial performance data understandable if you want to keep the trust of your shareholders and win over new investors. These individuals hate when you make them wade through a heap of financial figures.

Present your data using charts and graphics that they can understand easily. Invest some time and prepare self-explanatory flow charts or pie charts. Present historical reports to show growth trends, if it is the case to depicts successful strategies. Use arrows, sidebars, highlights, and graphical symbols while presenting key components of the report.


Data Interpretation and Presentation

You may have touched the sky but if you do not present your accomplishment in a systematic way, people will find it difficult to grasp it. Present your data in digestible chunks.

When you are writing your business’ annual financial report, present its financial achievements quarter by quarter to show the built-up of the tempo. Analysis of such data helps in accurately pinpointing changes in the trends, specific decisions and their effects on a business’ earning over the span of a year.


Business Strategy

Would you like to lay bare your successful business strategy, secrets or vision to your competitors’ scrutiny? It may not be a wise decision. You may choose to forgo this section while preparing the annual performance report for your business.

However, there are occasions when you want to make it know that you are a responsive and adaptive business. Compare your strategies against the results. The analysis may tell you what went wrong. You can also highlight tactics that worked and how you are refining them for future use.


Analyse Historical Data to Make Future Projection

You may believe that it is hard to predict the future. However, as a business, you could try and get a bit of handle on it. Including future projection analysis in annual reports is not strictly mandatory. It also needs reliable historical financial data collected over the years. If you have access to such data, find trends and analyse in it to come up with accurate predictions.


Analyse Earnings Trends

You can use past data to learn how it affects your business’ fortune. Compare trends and your data related to quarterly and annual earnings to make some projections. Show the future value of your company’s assets.

Well, this was all about how to prepare an annual performance report for your small business. It is a lot of fuss, but mind you, it is useful stuff. As it was stated in this write-up, you can prepare and use this document to understand your business better as well as to show your business in a better light to your future investors.