You have financial reports, but do they really help you make decisions?

Likely not.

Today we talk about 9 signs your reports stink and set the stage for the series to come.

But first, our sponsor.

Stop Settling for Less

Earn interest in a Business Checking Account, subject to rate sheets​

Remember the days when interest rates on bank accounts were less than 1%?
For most of my adult life, it seemed impossible to get an interest-bearing account for a business.

But now, with inflation spiking and short-term treasuries providing a higher yield, not having your funds in an interest-bearing account means you're implicitly losing out on money because you’re not earning that yield.

But that local bank you work with? Do they have a high-interest account? If they do, do they make you jump through a bunch of hoops to access it?
Perhaps you face wire fees. Or, perhaps their yield is limited to a savings account.

Enter Meow. (Meow is a financial technology company, not a bank.)

Meow finds banks that are willing to pay interest on business checking accounts, along with other awesome features:

1. Free ACH and wires
2. No withdrawal fees
3. ​Easy account application (10 minutes)

APPLY TODAY

Meow is a financial technology company, not a bank or FDIC Insured Depository Institution. The banking services described in this message are provided by Grasshopper Bank, N.A.; Member FDIC. See meow.com/rate-sheets for additional terms.

Want to advertise to 40,000 small business owners and leaders? ​Go here​.

9 SIGNS YOUR FINANCIAL REPORTING STINKS

Just because you have an Income Statement and Balance Sheet doesn’t mean you have financial reports.

When I talk to business owners, one of the first questions I ask is “where are your financial reports?” Because of that, I’ve seen all different types of reports, good and bad… But I’ll be honest: most are horrible.

Very few business owners have taken the time to setup financial reports that work FOR the business.

The right reports can be the difference between success and failure. Your ability to seize an opportunity or not. Your ability to be proactive instead of reactive.

When I ask a business owner “who does your accounting,” I’ll often hear their CPA is doing them. They’ll often say this as a point of pride, shoulders high, like “I got it together.”

But when I hear that, I hear a different story. I hear that they’re likely compliance-focused instead of insights-focused.

So, today, we’re going to cover:

1. How do we know if we have good or bad financial statements?
2. The key characteristics of a strong reporting system
3. The plan for the coming weeks

Today we’re introducing “ReportingOS.” ReportingOS is our comprehensive reporting framework to help you go from compliance financials to financials that help you run your business. We want to help you improve your decisions and we can only do that with the right infrastructure.

But first, how do we know if we have good or bad financial statements?

HOW DO I KNOW IF MY CURRENT REPORTING SYSTEM IS EFFECTIVE?

In seeing a lot of sets of financial statements, I’ve seen a lot of mistakes. Here, I address the ones that are most common. I even created a quiz to help you self-assess where you stand. ​Click here to take it​.

COMPLIANCE FOCUS OVER DECISION-MAKING FOCUS

I wanted to start here since I’d already mentioned it.

Your CPA likely does great work and I’m not here to dog on that work. But the reality is, they have a different goal than you. Their goal is to prepare your taxes accurately. Your goal is to run your business.

To achieve their goal, they remove context that is helpful to actually achieving their goal. They’re not wrong, they’re just looking at it in a different way.

Their report might show a drop in sales, but it wouldn’t show the different product or service categories.

Don’t settle for reports that only check the compliance box. Ensure your reporting system provides the context and granularity you need to make informed decisions that drive your business forward.

RELYING ON INACCURATE, INCOMPLETE, OR INCONSISTENT DATA

Your financial reports are only as good as the data they’re built on.

Bad accounting leads to bad financial reports, which perpetuates the cycle of business owners running their business without the numbers.

The right systems, processes, and reviews need to be put in place to ensure you’re getting the right data for the right reports. Even small errors—like misclassified expenses or overlooked transactions—can snowball into larger issues that skew your reports and lead to misguided decisions.

Accurate and consistent data isn’t just nice to have—it’s essential for running a successful business.

THEY ONLY LOOK BACK

Last month’s revenue might have been good, but what’s your pipeline? Without pipeline information, previous month’s sales tell you nothing about your health.

A report that stops at retrospective data can be helpful, but it’s not good enough to drive strategic decisions or prepare for what’s ahead.

To create a truly effective reporting system, you need to balance lagging indicators (what happened) with leading indicators (what’s likely to happen). For example:

• Pair your sales revenue with metrics like lead generation, conversion rates, or average deal size to anticipate future revenue trends.
• Use expense trends to project cash flow needs or identify potential cost-saving opportunities.
• Incorporate forecasting into your reporting cadence to align decisions with future scenarios.

Good reports look back, but great reports also look forward. By integrating predictive elements into your reporting system, you’ll move from reactive decision-making to proactive strategy.

THEY'RE TOO LATE OR DIFFICULT TO PRODUCE

A monthly Income Statement can be a valuable tool—but only if it arrives on time. If it takes three months to produce, the insights are outdated, and the opportunity to act has already passed. In the fast pace of business, even a few weeks can feel like a lifetime.

Your reporting cadence and timing should align with the speed of the business. And no matter the business, not getting a financial report for 4 weeks is too long.

A lot of times, slow reporting is a function of overly manual processes. For instance, manually compiling weekly sales data in Excel not only takes up valuable time but also increases the likelihood of errors.

Creating a regular reporting cadence, then holding the team to it, is foundational to having a good reporting system.

To speed up delivery, look for ways to automate the process.

OVERCOMPLICATING IT

A monthly financial reporting packet of 20+ pages may look helpful, but it actually makes it hard to identify what truly matters.

The same goes for a dashboard with 20+ KPIs. Sure, it looks good. But which of those KPIs are actually driving results?

Too much information can dilute the impact of your reports. If you highlight the whole page in a book, you have to read the whole page to get insights. Even then, it’s often hard to parse what’s most important. A cluttered or busy report is more likely to overwhelm decision-makers, which will result in inaction.

Instead, focus on the few metrics that align directly with your strategic objectives. Prioritize clarity and simplicity, ensuring that each piece of data serves a purpose. Your reports should guide you to action, not bog you down in analysis paralysis.

Ask yourself, “If I could only look at three numbers this month, which ones would give me the clearest picture of my business’s health?” These should form the core of your reporting system.

TAILORED TO THE WRONG AUDIENCE

A good report has no value in the wrong hands.

For example, a spreadsheet filled with hundreds of rows of raw sales data might be fine for an analyst, but it’s practically useless for a CEO trying to spot revenue trends at a glance. Without charts or graphs to highlight key takeaways, the data fails to tell a compelling story.

A CEO who needs high-level insights may be overwhelmed or distracted by details that result in them missing the main problem.

But a department leader with a high-level CEO report won’t have enough data to make department-level decisions.

I often see this in organizations where they want to share the financials up and down the chain. I’m often against this, because by presenting CEO level reports to the whole business, people make incorrect assumptions. What’s better, in my opinions, is preparing data that’s appropriate to their outcomes.

I’m all for transparency… it just needs to be the right type of transparency that’s actionable to the parties involved.

Tailor reports to match the needs of the audience:

• For Leaders: Provide concise, high-level summaries with visualizations to highlight trends, key metrics, and overall performance. Include a brief “What does this mean?” section to clarify the impact on strategy.
• For Departments: Include granular, actionable details that help teams make informed decisions about their specific areas of responsibility. Ensure the data is organized for easy analysis and implementation.

The best reports are those that empower the audience to act, so consider the actions you want each party to take in preparation of your reporting.

THEY DON'T EVOLVE WITH BUSINESS OR INDUSTRY

As businesses and industries change, reporting needs change. It’s important that you build a mechanism into your reporting system to review the system and improve upon it.

Use a combination of milestone triggers and time-driven triggers to update your reporting.

Enter a new market? Review your reports to see if you need to add something new.

Doing annual planning? Set aside some time to reflect on what’s working and what isn’t.

Reporting systems are not “set it and forget it.” To stay competitive and informed, you need to revisit and refine your reports regularly, ensuring they align with both your internal needs and external realities.

LACK PROPER CONTEXT

Let me ask you: is 10% revenue growth good or bad?

Your reaction might be to say good, but what if you’re in a hyper-growth VC backed business? Not only is that bad, it’s dismal.

Metrics without context mean nothing. Without context, it’s impossible to determine whether performance is truly strong, weak, or in line with expectations.

The proper context helps you assess whether metrics are trending in the right direction and informs what actions to take next. For example, understanding how your gross margin compares to industry benchmarks can guide pricing strategies or cost control measures.

Data without context is just noise. Set goals, compare versus previous years, and use industry benchmarks to give your metrics and reporting the proper color they need to be useful.

AREN'T TIED TO THE COMPANY's KEY OBJECTIVES

In some ways, this could fall under the “wrong audience” or “lack proper context” reasons, but I felt it was important enough to talk about on its own.

Reports that fail to align with your company’s strategic goals often miss the mark in driving meaningful action.

For example, if your business is focused on improving gross margin, a report emphasizing total revenue won’t help you measure progress toward that goal. This misalignment wastes time and resources while failing to support the priorities that matter most to your business.

Your objectives are the final destination in the GPS and your reports should tell if you if you’re on the road or not. Ensures that every metric serves a purpose and drives the decisions that matter.

Curious to see how you stack up? ​Take this quiz​ and see where you fall from maestro to beginner.

KEY CHARACTERISTICS OF A STRONG REPORTING SYSTEM

We can overcomplicate this really easily, so let’s get straight to the point. A strong reporting system will have:

• Relevance: Reports are tied to strategic goals.
• Accuracy: Data is reliable and verified.
• Timeliness: Delivered at the right cadence for decision-making.
• Clarity: Targeted to the right party and asy to interpret, with summaries and visuals.
• Actionable: Highlights insights and suggests next steps.
  • “What does this mean?”
  • “What should we do about it?”

To simplify the steps of creating actionable reporting, we want to:

1. Identify your strategic objectives.
2. Choose metrics (KPIs) that align with those objectives.
3. Simplify data presentation using visuals like graphs or dashboards.
4. Summarize and Recommend
   1. A key takeaway
   2. Recommended next step or action item

We’ve broken down this process in the PlanningOS series, but over the coming weeks we’re going to get into this specifics.

Next week we’re going to start by laying the financial foundations. We’re going to help you understand the point of each financial statement and show you what a good one looks like.

Next, we’re going to talk about your business drivers. What are the things that drive results? I’ll introduce some common drivers, as well as give you a process to identify those yourself.

Next, we’ll talk about building your reporting infrastructure. We’ll use the drivers as a foundation and walk you through a process of how to get the right numbers at the right time.

Then, we’ll give you some frameworks to turn data to decisions. We’ll walk. you through how to use your reporting in your decision making process and day-to-day operations.

Then finally, we’ll talk advanced dashboards and reporting structures. I’ll give you some insights into things it took me years to learn.

I’m excited for this upcoming series and I hope you are too.

Let me know: what questions do you have?

I will do my best to address them through the series.

‍