If you’ve attracted investments in your company or franchise, you’ve also gained the yearly task of preparing a stockholder’s report.

But preparing that report doesn’t have to barricade you in your office for weeks if you keep the basics in mind.

A Stockholder’s Report: Purpose

The main purpose of a stockholder’s report is to deliver answers to your audience’s questions. So don’t assume; ask your audience what they want to know.

But for the most part, your shareholders want to know one thing: how well their investment is performing.

And unless they specifically ask for more information, what that generally looks like is the year’s bottom-line profit along with any major contributing factors.

It’s often unnecessary to write long narrative passages to explain the company’s current financial position. Your profit figure will tell them that.

So be concise. If you must write an overview or summary, focus only on the information they need to know.

Investors are in it to make money. Your task is to show them that you’ll do just that — and that you’ll do it better than their other investment opportunities.

—Accion Opportunity Fund

Reporting on Revenue

The revenue section of your stockholder’s report should be straightforward. If your company has only one revenue stream, then you only have one section to complete.

For companies with more complex revenue streams, find out how much detail your shareholders want before you start compiling data.

There’s little point in adding endless line items if your shareholders don’t care about individual widget performance within a particular business unit.

But your shareholders will likely want to know your projected revenue for the remainder of the year.

You can use information from prior years to arrive at a fairly accurate number, unless the remainder of the year won’t be typical.

Reporting on Expenses

Preparing the expense section of your shareholder analysis reports usually takes longer than compiling the revenue section. Specifically, make sure you address:

  • Advertising expenses
  • Customer credits and returns (although you might detail this in the revenue section)
  • Marketing expenses
  • Rent or mortgage expenses
  • Office supply expenses
  • Salaries
  • Travel expenses
  • Utilities

When completing this section of the report, it’s customary to project your expenses for the remainder of the year.

Many organizations use the calendar year as their fiscal year, but you don’t have to if another date range makes better sense for your business.

To complete your projection, calculate the year’s remaining fixed expenses as well as any known variable expenses — like an upcoming sales conference or out-of-town appointment.

For fluctuating expenses, prior years’ historical data will help you with accurate projections, just like projected revenue.

Reporting on Staff

For small companies, your shareholders may want to know about individual employee performance and activities. Larger companies may focus on overall departments or omit them altogether.

If you must include employee information in a stockholder’s report, focus your attention on activities that increase revenues or reduce expenses.

Though your staff’s attitude and personality are important for daily operations, they don’t help you explain the bottom line.

Each shareholder group will have different objectives, ranging from determining dividends to expanding long-term growth potential. What you reported for one company or franchise may not be adequate for another.

So if you’d like to reduce the time it takes to prepare your reports, stay flexible. And start by asking your shareholders what they want.