At the end of the year, all small business owners should be creating an annual report. This can be beneficial for all organisations as a document that outlines the performance and well-being of the business based on the year just gone. This financial document should be issued to shareholders, investors and any other interested party but can also be useful for reflecting and seeing where you are at.
What’s Included
An annual report will contain key financial data and information on the performance of the business. This information can then be assessed and decisions can be made to improve the performance of the business over the next 12 months and beyond. So, what should be included in your annual report?
Chairman’s Letter
An annual report usually starts with a letter from the chairman or CEO to the shareholders providing a brief overview of the year and any significant developments.
Business Profile
A business profile briefly outlines the vision and mission statement along with details of the directors, officers, investor profile, products/services, competitors and risk factors.
Management Discussion & Analysis
In this section, there will be an overview of how the business has performed including profit margins, sales and income. This section can also include other information such as new hires, acquisitions and any other information from management that would be valuable for stakeholders.
Financial Statements
Financial statements are the meat of the annual report that current and future shareholders and investors can use to assess the company’s health. The main financial documents that should be included are:
- Balance sheet
- Income statement
- Cash flow statement
- Statement to shareholders
Writing an Annual Report
Writing an annual report can be daunting, especially if you have not done one before. Fortunately, it is not that difficult as it is mainly made up of financial documents and you can consult with audit tax and consulting services. With the other areas, you simply need to determine the key message of the report that you want to get across to shareholders. You should outline the positives from the year just gone as well as the challenges while also looking ahead by setting expectations for the year to come. Make sure that it is concise and avoid using fluff so that it is easy to scan through.
An annual report is a key document that every business owner should prepare at the end of the year. It is a chance to reflect and analyse on the year just gone so that improvements can be made to take the business forward over the next 12 months.
OTS News on Social Media