I was going to start by saying ‘a picture is worth a thousand words’ – but you all know that one already. Financial charts are great ways to get across the story of your business, even if that story hasn’t happened yet! So rather than just using charts to convey dry information, I’m going to talk about using charts to tell stories.
Why should I bother with charts?
There are two major ways to present financial information – reports and charts.
Reports are great for getting into the detail of figures, and for viewing several different sets of information at once, whether they be different periods of time or different financial accounts. What they lack though, is the visualisation of trends in data. It is hard for the human brain to track the differences between multiple sets of numbers and compare and contrast several types of difference.
So charts aren’t just a boardroom tool for quickly explaining how much profit we made this quarter – they’re much more than that – visualisations of trends and differences that make it easier to ‘see into’ the data they present. They’re great for comparing data and displaying difference.
A year in the life of a business
The following charts give us a huge amount of information about this business’ plans for the future. Take a look at the first and think about how much you know about the business as a result:
Quite a bit, right? The business – a startup – starts making a loss, with its initial expenditure roughly double its revenue in the first month. Only £10k of opening cash will save it from bankruptcy in the first quarter. Then, gradually, as its startup costs decrease it begins to make money.
After the first quarter of 2018 the business expects to have a decent margin of revenue over expenditure – roughly 20% on average. While comfortable for some businesses that can depend on steady sales this may not be so comfortable for businesses with more variable streams of income. A bad month could be a major setback to a business like this.
By the end of the year the business expects to have quadrupled the initial investment of £10k to over £40k in cash. A very good starting year…
Here are some more variations on the chart above:
How to these charts make you think differently about the same information? Without the “Cash” line in the last chart, do you feel more, or less happy about the direction the business is heading in?
These charts are all variations of the cash flow chart on the Brixx dashboard. There are other charts here too, which tell more of the story of your business. More on them in future posts!