Part III. Disjointed data
Last week, we continued the topic of how to present financial information to various audiences by addressing the importance of choosing your presentation data carefully. In addition to keeping your data simple and focused, it’s key to select the right metrics – those that address both the exact purpose of your presentation and the audience, whether it is lenders, directors or potential investors. Are there summary statistics that will get your message across more meaningfully than raw numbers?
Problem: Disjointed data. Solution: Provide perspective.
The next step in providing an effective financial presentation is to offer perspective about the data. Even if you select the right numbers to highlight, your financial information could be useless to your audience unless you draw connections between those numbers.
Pamela Springer, CEO of small-business online community Manta, says presenting financials without context is one of her pet peeves during financial presentations. Context paves the way for a more meaningful discussion about the future. “You could have great financials today, but without an appreciation for the market, key performance indicators and an understanding of what value you deliver (sustainably), your financials could eventually slip to something less desirable,” she says.
Showing how your data relates to the market or to key performance indicators is one way to provide perspective. Context can also come from discussing how the data relates to company goals or to previous performance. Many executives say they prepare financials and contrast them with the current quarterly plan or long-range goals. You can also provide perspective through contrasting the data to a benchmark, such as an industry average. Sageworks, for example, provides real-time industry data that can be used to compare financial performance to industry peers.
Springer says that when she listens to a financial review, she expects each time to hear about growth rates, both in terms of key business metrics and financial metrics. Seeing growth rates compared quarter to quarter and year to year is a great way to examine the health of a company, she says. But again, resist the urge to offer too much data.
CFOs say that when they prepare for board meetings, some of the information they routinely expect to provide includes:
Cash flow forecast
Outline of future risks and ways to mitigate them
Comparison of financial results to past periods and budget
Comparison of company’s financial position and liquidity to past periods and budget.
Next time: Presentation preparation tips.