The 5 business Reports You Need to Make Sense of a Crazy 2020

Jan 29, 2021 | Cloud Accounting, eCommerce, Inventory Apps, Power BI, Project Management, Reporting

It should be safe to say that we’ve all had enough of 2020 by now.

But if this January was anything to go by, the wild ride isn’t over just yet.

Between the ongoing new lockdown and the latest Brexit changes, product-based businesses like yours could still be looking at a rocky year ahead – and we could find that 2021 is o nly slightly better than the year we’ve just put behind us.

So what’s the best way to move forward out of a difficult time?

By looking back – and learning from the challenges you’ve faced.

It’s not easy to make sense of a chaotic time. But with the right analysis from the right tools, you can get the insights your business needs to never fall into the same pitfalls again.

Here are the 5 types of reports your product-based business needs to learn from a difficult year:

1. Cash Flow Reports

It’s been a year of lockdowns, restrictions, and confusing consumer habits. And if you’re running a product – based business, that probably meant some huge gaping holes in your incoming cash – either through periods of inactivity, problems with your suppliers, or simply a lack of demand for your products

If you were lucky enough to be sitting on a healthy cash flow before things got crazy, you might have been able to ride out the storm. Or you might have been quick enough to start cutting your spending as soon as the trouble hit.

But the reality is that lots of businesses took some heavy damage to their cash flow – and a proper assessment of your 2020 cash flow could help your company be more prepared in the coming months.

So what kind of tools should you be looking for to help you understand your cash flow?

If you’re using Xero, you’ll have access to the Business Snapshot feature. It’s a bit like the existing Xero Dashboard, giving you fast and easy access to the financial metrics you need to get a complete overview of your business.

But the main difference is in the length of the period it covers. While the Xero Dashboard gives you an overview of your business today, the Business Snapshot shows you how your business is doing over a month, a quarter, or a year.

With a long-term analysis stretching back over 2020, you’ll be able to see exactly when your money was disappearing (and exactly when it wasn’t coming back in).

2. Profit and Loss Reports

With a solid understanding of the health of your cash flow, it’s time to start looking at the numbers that really matter: your revenue, expenses, profit and loss.

This is a big one – and the profit and loss report should already be a bread-and-butter statement that every business relies on regularly.

But if you want the complete picture of what went wrong last year, you’ll need more than just a general overview:

You need reporting software that can show you segmented results.

So what does that mean?

It means you need to be able to split up your chart of accounts beyond simple totals – with a fine-detail look at the categories your sales and expenses fall under.

If you’re using Xero, you can set up Tracking Categories to help you segment your reports. And for a product-based business, filters like these are a gold mine for getting the deep insights you need to make predictions for the future.

With a segmented profit and loss report, you’ll be able to see which types of product were suffering (and which ones brought in the big bucks). You’ll know exactly which sales channels weren’t affected by the lockdowns – and which ones were resilient to the chaos.

But you need to be careful here:

Splitting up your reports according to categories is useful for getting a deep look at the trends of your business. But there is such a thing as too much segmentation – and you need to make sure you’re not drilling down too far.

If you’re segmenting your totals into categories and types of product – like ‘food’ or ‘homeware’ – that’s a useful mid-level overview of the numbers.

But if you find yourself segmenting down to individual products – like ‘Mars bars’ or ‘Samsung microwaves’ – you’re not going to get a broad enough picture of the trends behind your sales.

Your total revenue (or profit) is a useful measure of your overall activity and success as a business. But when you’re trying to analyse the trends of a crazy year – and the habits of a market that’s been through big changes – you need to dig a little deeper.

3. Balance Sheet Reports

While the first two financial reports (cash flow and profit and loss) were dealing with the money moving in and out of your business, a balance sheet report is something different:

It’s a snapshot in time of your assets and liabilities at a particular date – what your company owns, and what you owe to other people.

So why is that so important for 2020?

If your business has been suffering with low profits and poor cash flow, you could be out looking for new loans or investors to help you weather the storm ahead. And the balance sheet is one of the most crucial pieces of information that banks or investors will be looking for.

Luckily, it’s a fundamental financial report that’s easily accessed from any modern accounting software.

If you’re using Xero, you’ll have access to the new Balance Sheet Report function, with options for accrual or cash displays – as well as the ability to filter by tracking categories.

4. Operational Reports

So far, we’ve only talked about the main types of financial reports. And while those reports are useful, you won’t always be using them to drive the day-to-day decisions that decide the future of your business.

Instead, you’ll need to dig a little deeper with operational reports, using the specific categories and tags you’re tracking (especially if you’re a product-based business).

You’ll probably need to start looking at things like:

  • Aged inventory reports – How long did each product spend in storage before it was sold? (And how much did it cost you to keep it there?)
  • Purchase reports – How much of each product were you buying? And how were your suppliers’ prices changing throughout the year?
  • Manufacturing reports – Did your planned parts and costs match up to the reality? How often were you hitting (or exceeding) your capacity?

This is where things can get tricky. While the baseline financial reports are usually straightforward, these operational reports can quickly become overwhelming – and the software you have in place might not be enough.

So to help you get a grasp on the huge level of detail and different variables, we usually recommend looking into something like Microsoft Power BI.

By drawing data from the different systems you already use (like your accounting software, your project management software, or your CRM software), Power BI can give you a single place to see the visual dashboards and streamlined reporting you need to make understanding your business as simple as possible.

5. Marketing Reports

2020 was a tough year for marketing.

With demand for so many products dropping, businesses had to fight harder than ever to bring in new customers. And with so many businesses struggling with their cash flow, it became more important than ever to make every penny of your marketing budget count.

So how can you make sure your marketing budget is going to good use?

You need a deeper understanding of what worked – and what didn’t.

That usually means generating reports that can show you:

  • Your audience reach and clicks – for your PPC adverts, social posts, or email campaign.
  • Your Ecommerce traffic and conversions – for your online stores in places like Shopify or WooCommerce
  • And your SEO analytics – for both your company website and your online marketplaces.

But just like your operational reports, these marketing reports are usually above and beyond your everyday product-based systems. So if you’re looking to get complete data on your marketing efforts, you’ll need to look into some external apps and add-ons – especially those that you can easily integrate with Power BI.

Ready for a new and improved 2021?

We all feel like we’re ready to leave 2020 behind.

But that doesn’t mean we can’t learn from the lessons we faced along the way.

We’ve been helping product-based businesses to choose and use the best apps and systems for years. And a big part of that process is getting our clients set up with the right reporting tools – to give them the accessible insights they need to learn and grow.

So if you’re looking to make your business stronger than ever this year

book a call with one of our experts and we’ll be happy to find out how we can help.

Click here to download the PDF version of ‘The 55 business Reports You Need to Make Sense of a Crazy 2020’


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