Every business should be regularly tracking performance. Smaller SME’s should do this at least quarterly, although monthly reporting is best.

Financial performance reporting includes profit and loss reports as well as balance sheet monitoring. Comparing performance against the same period last year and also against the financial forecasts prepared earlier in the year is vital.

Reports should be both detailed and summarized. Summary reports enable management to “see the big picture” and ideally will fit on one or two pages. Detailed reporting should also be available to “drill down”.

If the results are not as expected then management should identify problems and opportunities, and proactively amend strategy accordingly. Regular business performance reporting is a critical management task and provides the starting point for the owners of SME’s to “work on their business”.

How do you know what’s working and what’s not if you are not measuring the financial results? Remember “What you can measure you can manage”.