Reporting is a very important function of managing a business. The purpose of reports is to process and condense the information on the performance or activities of a business into something that can be grasped by those we are reporting to or for. It’s standard for businesses to report every month though some situations may require reporting on a shorter or longer time horizon. With this in mind, what sort of graphs or charts can we include in our reports to help people understand the performance of the business? The following charts are meant for management reporting, so this is for people internal to the business.
Sales origin pie chart
The sales origin pie chart performs the very important function of telling us where our business is coming from. You can do this at two levels. Firstly identify what percentage of sales volume was to repeat customers versus new customers. Then you can further break down the origin of the new customers. This can be presented in one very neat pie chart. To compare between two different periods you can use the doughnut chart which can display the origin breakdown for each period while visually placing the two periods next to each other.
Living in an inflationary environment it’s easy to get disillusioned with the meaning of monetary figures especially when you want to compare these figures with others through time. What was a lot of money in January 2021 in Zimbabwean dollars is not a lot of money today. To fix this we look at sales volume and present it as a time series. Ideally, you will want to look at this month by month but shorter horizons can work too. If you have multiple product lines you can break this down by product using the stacked line graph, this will show the contribution of each product line to the total. You can alternatively use stacked bar graphs which will achieve the same result but time series may work better to display a trend.
Cost containment is a priority in all businesses though more important in some businesses than others. We may also need to be mindful of the impact of inflation on the values of costs. Displaying costs using stacked bar graphs is a great idea and it not only shows the costs but a breakdown of the costs. If you are dealing with direct costs you can also cluster the bar graphs with a volume bar graph for the cost driver. This will help to show if there is any impact from inflation on the change in costs.
The sales funnel/pipeline
The sales funnel or pipeline shows the progression through the customer journey and how many interactions have happened at each stage of the pipeline. By so doing it also shows the conversion rate from one stage to the next or between stages. For example, you can have 10000 initial enquiries that lead to 1000 quotes that lead to 100 sales. You can either look at how many enquiries became quotes, how many quotes became sales and or how many enquiries became sales. Displayed as a funnel through stacked cones you can see how well you are converting and where there may be bottlenecks affecting the process.
Returns, breakages and wastage
How well you manage your inventory is just as important as how well you sell it. If you’re a manufacturer you will also want to look at how well the products hold up in the hands of customers. To a lesser extent, even a reseller will want to assess this to evaluate their supplier and if they should look at the supplier agreement or perhaps change suppliers altogether. You can use different measures for different business setups but what you want to know and show is how much of your inventory is not ending up in the hands of the customer. This is a cost that should be contained. You can use the histogram and stack it for different types of inventory wastage.
Having these charts in your reports will help you to communicate things much better. People generally understand complex mathematical data and relationships better when they are presented visually.