When it comes to running a business, there seems to be a never-ending list of documents that you will need to provide in order to ensure that there is good communication in the workplace.
There are a number of reasons that you may need to write such documents but in order to utilize them effectively, you need to know exactly what they are.
This is especially true of annual reports, a commonly required internal communication report that is rarely put together effectively.
What Are Annual Reports?
An annual report is a detailed report on a business’s finances, as you might have guessed, annually. Other than detailing the company’s current financial status, it can be used to speculate on the future of the business.
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Why Write an Annual Report?
Depending on your business structure, you may be required to write an annual report. If it is either a corporation or non-profit, it is probably mandatory to provide one to all shareholders and board members. However, even if it isn’t mandatory for your business, an annual report can be an enlightening document for any business.
A well written annual report can actually be used as a marketing tool. It contains more than just financial information, but also reflects on accomplishments. You can also offer insights into that financial information to suggest potential future avenues for your business.
Annual reports can be given to investors or be made available to customers, and if you use it right you can use the information inside it to gain more interest in your company.
What Needs to Be In an Annual Report?
An annual report should be the definition of comprehensive. The average annual report ran up to an impressive 135 pages in length. That’s a lot of information to be included in one report. So what goes into it?
Most annual reports need to have:
1. An opening statement from the CEO or Board Chair
This person, or people in the case of partnerships, should write some kind of introduction or foreword. In it, they should comment on the operations and other aspects of the business. It should include a layout of anything that was initiated or discontinued. It can also include the purpose and history of the company as well.
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2. Income statements for the last year
In this section, you are going to have to break down the profits or losses of your business. What this means is that you will look at what expenses were incurred and what revenue actually came in. You will need to look at both your gross and net income.
3. Balance sheet
A balance sheet in your annual report will demonstrate your company’s financial position. This will look at any liabilities (liabilities being any kind of debt, fees, or wages that still need to be paid) and assets (assets being any equipment, inventory or property that the company has).
4. A cash flow statement
The next step in your annual report will be then to break down where the income is going. The cash flow statement should be broken down into four sections: operating activities, investing activities, financing activities and supplemental information. You’ll be taking what’s reported on the income statements and organize them into these sections. This will show whether the operating costs outweigh the cash income. For a starting business, this will most likely be the case and will only be an issue if profits never grow.
5. Notes to financial statements
This is the section that ties everything together. Numbers can be very intimidating and not many can really grasp what those numbers mean laid out like that. So this is where the financial statements can be explained.
This also gives you a chance to explain any numbers that might otherwise raise eyebrows. Sometimes disasters strike and an unexpected cost can appear. If you’re just looking at the numbers it could make implications, but this section will give you a chance to clear it up before minds can be made up.
How to Make Your Annual Report Stand Out
All of the above things are just what are required in an annual report. Without those things, you don’t have a report. But having said that it can be used as a marketing tool, this would require your annual report to stand out a little more. Though your financial model may be sound, you need to go above and beyond on your annual report if you want to garner more interest in your business with it.
To make an annual report above and beyond it needs to be at least remotely enjoyable to read. Try to transform your report into a narrative. Between all the charts and graphs, you can be painting a story for your investors to follow along.
You can pick a theme, like a culminating moment that occurred during the period described. Centering the report around that event or around a single concept will help give the readers something to understand if they aren’t interested (or can’t understand) numbers.
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While doing this, it gives you an opportunity to toot your own horn. You can pepper in testimonials, events, accomplishments, or whatever you might have to flaunt to demonstrate the business is enjoyable on a personal level. You can even use it to foster good relationships with your employees and board members by acknowledging promotions, personal achievements, and how their labor keeps the business running.