Reporting that an owner and an investor both use

When an investor takes part in running a business, reporting is no longer a courtesy sent to someone outside. It is the shared record two people use to make decisions together. If the owner and the investor read different numbers, or the same numbers at different times, they will disagree about things that are not really in dispute.

Good reporting between an owner and an involved investor is short, regular and drawn from one source. It is built for the meeting where decisions are made, not for an archive.

Work from one set of accounts

The first rule is that there is only one set of figures. The business keeps its accounts in one system, and the report draws from that system. The investor does not keep a parallel spreadsheet, and the owner does not keep a version with adjustments only they understand.

This sounds obvious, and it is often broken. Different versions of the numbers grow up because each side wants a view the other's report does not give. Fix that by agreeing what the report contains, not by building a second set of figures.

Keep the pack short and the same each time

A useful monthly pack for an owner-managed business fits on a few pages. It might hold these parts:

• The profit and loss for the month and the year to date, against the budget.
• Cash at the end of the month, and a forecast of cash for the next few months.
• Money owed to the business and by the business, with anything overdue named.
• A small number of measures that matter to this business, such as orders taken, jobs completed or staff turnover.
• Progress on the work each side agreed to carry, in a line or two each.
• The decisions needed before the next meeting.

Keep the format fixed. When the layout is the same each month, the eye goes straight to what has changed. When it changes each month, the reader spends the meeting finding their way around.

Explain the variances in words

Numbers alone show that something moved. They rarely show why. Beside each significant difference from the budget, the person responsible writes a sentence or two: what happened, whether it will continue, and what is being done about it.

These notes are where most of the value lies. They oblige the person closest to the figure to think about it before the meeting. They also give the other side something to agree or disagree with, which is a better start to a discussion than a table.

Fix the cycle and keep to it

Agree when the month's figures will be closed, when the pack will be sent and when the meeting will be held. Then keep to those dates even when the month was dull. A reporting cycle that slips when things are quiet will not be relied on when things are not.

Send the pack ahead of the meeting, with time to read it. The meeting is for decisions and for the questions the notes did not answer. It should not be spent reading the pack aloud.

Report bad news early and outside the cycle

The regular pack is not the only channel. If something important goes wrong between meetings, such as a large customer leaving, a payment failing or a key person resigning, the side that learns of it tells the other at once. Waiting for the monthly pack turns a problem into a surprise, and surprises damage the working relationship more than the problem itself.

The same applies to the investor's own work. If a project the investor agreed to carry is behind, the owner should hear it from the investor first, with the reason and the plan, before it shows up in the figures.

Reporting done this way takes a few hours each month. It is a large part of how two people run one business together without getting in each other's way.

We meet the owner on a cycle agreed at the start, work from the same accounts, and decide the next steps together.