What Does Your Board Expect for Your Trimestrial (Quarterly) Reports?

Although there are no legal requirements, scheduling board meetings regularly to discuss your business’s financial health and direction is highly encouraged. However, crafting quarterly reports can be a source of anxiety and dread for CEOs, especially in the early days of their business journey.

But by gaining insights from founders' experiences and concrete advice, you can transform your meetings into productive sessions to improve your business’s growth. Board reports are essential for companies, as they contain all the critical financial materials for strategic discussions and decision-making with venture capitalists (VCs).

This article will help you approach your board meetings with confidence and perspective by teaching you about board organization and financial transparency in your reports. From understanding board expectations to improving meeting dynamics and crafting comprehensive reports, this article serves as a toolkit for CEOs seeking to harness the full potential of their board interactions.

Should you fear board meetings?

Jeff Bonforte, the former CEO of Xobni and now the SVP at Yahoo, has pointed out that board meetings can be a source of stress for founders due to their length and focus. However, he emphasizes that founders should be confident in these meetings and instead see them as opportunities for collaboration and progress.

What to expect from a board meeting

According to Jason Calacanis in his podcast, the primary purpose of board meetings is to ensure good corporate governance. They stimulate occasions for reflecting on your business's performance and plans to foster growth based on dynamics reflected by your financial metrics. 

Boards are pivotal in shaping a company's direction and strategies, offering valuable insights into various aspects like sales and product plans. Anna Stafford, Director and Founder at AI Accounts, highlights that “integrating finance into board meetings ensures that each decision made is not only innovative but grounded in financial reality.” Ultimately, your board should aid in driving your company's future development and evaluate what works and needs improvement, notably in financial terms.

Keep in mind that your board is here to help you, founder, make the best of your company, as Jeff highlights: “Every single entrepreneur forgets that the board works for them. […] As the CEO, you feel like it’s your job to carry the ball across the line, but it’s also the board’s job too”.

What is your board expecting from you?

Expectations for your reports may vary based on your business's stage, investments and sales opportunities, or specific requirements. 

In terms of finance, the goal is to show that you understand if your business is on the right track. As Anna puts it: “By actively integrating finance into board meetings, start-ups can demonstrate to investors that they understand the financial implications of their decisions and are committed to financial sustainability.” By doing so, you are building trust with VCs and ensuring their confidence. 

Jeff Bonforte mentions other general expectations concerning key strategic aspects such as market changes, team dynamics, and achieving previously set goals. You can anticipate expectations by engaging with board members to understand their priorities. Seek feedback and guidance from board chairs or advisors to ensure you know what to focus on while preparing for the meeting.

Improving your board meetings

As a founder, you must learn how to organize, prepare for and conduct meetings to maximize their effectiveness.

For Scott Orn, a VC investing in numerous Seed Stage and Series A businesses, the key is to hold meetings regularly, every two to three months, to stay in touch with the board and keep an eye on your start-up’s financial health. Frequently meeting your board will help you set objectives and track progress over time.

Regarding organization, Becki DeGraw, in Jason Calacanis’s podcast ‘This Week in Startups’, recommends setting a tight agenda for each assembly to increase productivity. She suggests assigning estimated discussion times for each key topic, including “housekeeping tasks'', so you can ensure the meeting runs efficiently. 

Jeff Bonforte’s strategies for making meetings more efficient and productive include discussing with participants beforehand to get informed on their expectations and concerns, especially on matters that will later require their approval. “It gives them time to understand the requirements,” Becki says. You can include proposed resolutions in the pre-material to improve the discussion flow.

Finally, maintaining good communication with your board will allow you to improve your collaboration and receive the best guidance and support. Therefore, fostering transparency and building trust is essential for a good work environment.

Our toolkit to craft the best financial reports

Preparing for the meetings includes organizational matters and drafting your financial reports, which are vital for good decision-making. Let’s review the reporting requirements to help you prepare your board deck before the meetings. 

How do you do financial reporting?

VC Scott Orn advises starting by including a financial status page at the beginning of your board deck. 

By displaying factors encompassing revenue growth, spending, and long-term customer contribution, you help your board have an immediate overview of your business’s financial situation. Scott recommends using the following metrics:

• Cash Balance shows how much your company currently holds and reflects your start-up’s financial health.
• Burn Rate indicates how fast your business is spending its cash reserves. VCs will question whether it's sustainable or needs adjustment.
• Total Cash Runway is the estimated time until your company exhausts its cash reserves based on the current burn rate. It helps project how long you can sustain operations without additional funding.
• Monthly Recurring Revenue (MRR) reflects the recurring revenue generated from subscription-based services or products and shows revenue stability and growth potential.
• Annual Recurring Revenue (ARR) is an annualized MRR that your VCs will examine to assess the long-term revenue outlook and business stability.
• Bookings are essential to understanding sales performance and predicting future cash flows based on the value of customer contracts.

 Further, a detailed financial report should include the three primary financial statements: the income statement, the balance sheet, and the cash flow statement. These materials will help your board make informed decisions and budget effectively.

Essential operational metrics to track

Make sure you add in-depth operational metrics in your reports, which should be presented by the VP responsible for each functional area. Scott recommends the following repartition to give the best insights:

• Customer Retention: Churn rate metrics will be overseen by the VP of customer success, who can provide historical data to illustrate improvements.
• Sales: The sales VP should present customer numbers, average selling prices, and upsell metrics.
• Customer Lifetime Value (CLV): CLV is a pivotal metric that the marketing VP, sales VP, or finance team should handle. It showcases clients' revenue and retention.
• Hiring: As a CEO, you typically manage hiring decisions; finance VPs/CFOs can also do so. Presenting hiring updates with financial reports helps cover expenses, potential return on investment, and board inquiries.

Focus on income in your reports

Finally, according to Toinon Georget, CEO and founder at Waalaxy, income and income growth should be the main metrics to emphasize regardless of your business model. Then, he suggests looking at secondary metrics which can help monitor and comprehend your business's growth. Here are the essential ones:

• Churn offers insights into user satisfaction and your ability to maintain customer loyalty over time.
• Net Revenue Retention (NRR) calculates the revenue retained from existing customers over a specified period, considering expansions, contractions, or churn.
• Monthly Recurring Revenue (MRR) aids in understanding revenue stability and growth trajectory.
• Customer Happiness Rating (CHR) provides insights into customer sentiment and areas for potential improvement.
• Customer Lifetime Value to Customer Acquisition Cost Ratio (LTV/CAC) offers valuable insights into the return on investment from customer acquisition efforts and ensures sustainable growth.

 Streamlining board reporting with analytical tools

To optimize your board reporting, it's crucial to present all your data clearly and well-organized. As presenting all this information can be challenging, you can use different aids to facilitate the process and automatise it as much as possible. 

To facilitate your data management, you can use analytical tools like Fincome. It helps you centralize data aggregation and reporting, streamlining data analysis from diverse sources. 

About Fincome, Denis Cohen, CEO at Dropcontact, comments: “A French tool for monitoring KPIs (MRR, ARR, Churn, etc.) that is essential for any SaaS solution! […] It's just top-notch, highly visual and very promising. I love it! But beyond the KPIs, the next promising evolution of their product is, above all, budget vs. actual monitoring. And that's my secret dream, to have perfect tracking without spending time making Google Sheets. The dream of every CEO and, for some, of their Board.”

Visualizing your data

Moreover, complex financial and operational information can be simplified through visual aids like charts, graphs, and tables. You should focus these visuals on critical metrics and trends to make complex data more accessible and insightful for board members. As Daniel Lunani, Customer Support at FinTech, emphasizes: “Data visualization tools, such as Tableau, Power BI, and D3.js, transform complex datasets into visually accessible insights. […] These tools enhance decision-making processes by providing a clear and compelling data representation.”

Additionally, implementing a digital board portal or management software further enhances the efficiency of board reporting. By centralizing documents, agendas, and reports in one location, you will reduce your administrative burdens, ensure the timely distribution of materials, and foster improved communication among board members.

What can be done if the metrics are bad? 

With all that in mind, you might still end up in situations where you have to present bad results to your board. Maybe the market isn’t there, or your product is not taking. This situation can be stressful and uncomfortable for you as a founder, but here is advice on how best to handle it.

As Jeff Bonforte and Scott Orn advocate, transparency is the best way to solve challenges during board meetings. Scott highlights the importance of keeping the board updated on all adverse developments: "Sharing bad news as soon as practical allows board members to digest the information and provide thoughtful, strategic advice rather than hasty reactions."

Therefore, investors Scott Kupor and Frank Chen say effective communication will help you determine the best action. Overall, feedback from the board is aimed at aiding the company's growth rather than penalizing you as a founder. With honest communication, you can explore viable solutions and address challenges effectively. Kupor and Chen highlight that CEOs and VCs share similar viewpoints more often than not, so you shouldn’t hesitate to share information. 

Special tips for early-stage board meetings

You should ensure you get the most out of our board meetings in the early stages. Remember to follow good practices from the start of your journey. 

According to Scott Orn, in the initial stages, it's common for the CEO to handle all report presentations. Nonetheless, you should structure these reports based on functional areas. This allows you to address inquiries systematically, covering aspects like marketing strategies, program specifics, costs, performance metrics, and customer acquisition. Doing so, you help the board gain a clear and coherent understanding of your business’s operations.

In terms of focus and finances, Toinon from Waalaxy emphasizes that as a young business with VC backing, your primary focus should be on maximizing sales growth. Track growth weekly in the first three months and target at least a 3% improvement. 

• Below this threshold indicates a lack of product-market fit, meaning you need a deeper understanding of customer needs and to align your product accordingly. At this stage, he advises to concentrate on improving conversion rates and satisfying existing customers. 
• Iterative adjustments are required for growth between 3-5%. 
• Achieving 5-10% growth signifies a strong product-market fit and satisfactory weekly sales growth. 
• Finally, growth rates above 10% are exceptional and indicate rapid expansion but require cautious management due to the potential for accelerated growth. Showing your growth evolution to your board is essential at this stage.

Finally, some forward-thinking is needed to establish long-term goals. As a young business, setting objectives, target numbers, and figures can help you track your evolution and progress.

Conclusion

The board can offer valuable collaboration and strategic decision-making. By understanding and meeting board expectations, you ensure that you make the most of your board meetings. Maintaining honesty with members, especially concerning finances, is essential to figuring out the best strategies for your start-up.

Remember that during challenging times, transparency is crucial, and the earlier you can establish good practices, the better you will pave the way for continued growth and success. 

Ultimately, board meetings should not be feared but embraced as opportunities for development and progress. The board should be a valuable resource to support CEOs in making the best decisions for their companies' success.

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