By Bryan Knipe, founder of TriPinnacle Advisors
Most board updates are a report of what happened last quarter: activities, a slide of numbers, a few wins. The board reads it, asks questions the update should have answered, and the meeting spends its time catching up instead of deciding anything.
The updates that work look forward. They say what changed, what it means for the plan and what decision is needed. I have presented business plans and results to boards, owners and investors more than ten times, held the COO/CFO seat that prepares those numbers, advised CEOs on reporting to private-equity-backed boards, and run investor relations through a fundraise with a large number of small investors. The structure below works for all of them.
1. Lead with one paragraph
The first thing in the update should be a short paragraph a director could read in the elevator: are we on plan, off plan or changing the plan, and why? If there is a problem, it goes here, not on page nine. Boards forgive bad news. They don't forgive finding it themselves.
2. What changed since last time
Not everything that happened, only what changed the picture: a customer won or lost, a hire made or missed, a regulatory or market change, a cost that moved. For each one, a sentence on what it means for the plan.
3. The same numbers, every time
Pick five to eight measures that say whether the business is healthy, and report them the same way every time, against plan and against the same period before. Changing the measures every quarter makes it look like you are choosing the flattering ones. For most companies the list includes revenue or bookings, gross margin, operating spend, cash, runway and one or two operating measures that drive the rest.
4. Cash and runway, plainly
Cash on hand, monthly burn, months of runway and the date you need to raise or reach break-even. If the date moved since the last update, say how much and why. This is the number directors care about most and the one most often buried.
5. Risks, with owners
The three to five things most likely to throw the plan off, each with an owner and what is being done about it. A risk list that never changes is not a risk list; update it, and remove risks that have passed.
6. The decision needed
End with what you need from the board: a decision, an approval, an introduction, advice on a specific question. Put it in writing before the meeting so directors arrive ready. A meeting built around one or two real decisions is worth far more than a tour of the slides.
7. Everything else goes in the appendix
Detailed financials, pipeline lists and department updates belong in an appendix for the directors who want them. The main update should be short enough to read in fifteen minutes.
Boards, owners and investors are different readers
- A board needs enough to govern and decide: the plan, the risks and the decisions.
- A private-equity owner usually wants the same measures in the same format every month, tied directly to the investment plan and the value-creation milestones. Consistency matters more than presentation.
- Investors in an early company, especially many small ones from a crowdfunding or private placement, need a regular, honest update in plain language: progress against milestones, cash, what is next and how they can help. Silence is what loses their trust.
Talk to directors before the meeting
The best board meetings have no surprises. Walk the key directors through bad news and big decisions before the meeting, one to one. The meeting is then for deciding, not for reacting.
Where this fits
As a fractional strategic CFO, I build the model the update reports against, write the update with the CEO and help prepare the board conversation. The update is only as good as the plan behind it, which is why I start there.