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Five Board Reporting Requirements First-Time Founders Need to Know

Many first-time founders find dealing with their board to be an intimidating process. That’s particularly true as businesses grow and start to add more directors to your company’s board. Often, board members include lead investors and accomplished business leaders. Maintaining a productive, constructive relationship with these key stakeholders is vital. 

When it comes to running successful board meetings, a key element of your success as a founder lies in being sufficiently prepped for the meeting. If you come unprepared, your board will not be impressed. Remember, board members tend to be extremely busy people. They might sit on 10 or 15 other boards, all of which meet just as regularly as yours. 

Presenting correctly structured information that enables board members to quickly tune in to your business’s progress and challenges is central to a successful relationship with your board. But it can be difficult to know where to start. What data and insights do board members expect to see, and how should this information be formatted?

In this guide, we’ll answer those questions and more, exploring several board reporting requirements that first-time founders should be aware of. 

G-Squared Partners provides outsourced accounting and CFO services to a wide range of startups. Founders work with us to improve the accuracy and timeliness of their financial data, become GAAP compliant, prepare for board meetings, and more. Contact us today to learn more about how we can support your business. 


What Does a Board Do?

Before we explore the reports that founders should share in advance of and during a board meeting, it’s first important to clarify a few details about the responsibilities of the board. 

Your board of directors retains ultimate responsibility for the overall direction of your business. It plays an important role in making defining decisions, such as when to raise new capital, the hiring and firing of senior executives, and approving budgets and major strategic plans. 

Boards tend to be composed of founders and investors. Depending on your business’s maturity, there may also be independent directors: individuals who do not have a financial interest in the business but are compensated for their services on the board. Typically, each series of funding receives a seat on the board: seed investors receive one seat, Series A investors receive one seat, and so on. 

Board members are fiduciaries for your company. They are not loyal to you personally or even to themselves: their remit is to serve the best financial interests of the company’s shareholders. So long as your ambition is to maximize the value of your business, your board should be eager to help and support you as a founder. 

Boards meet on a regular basis, typically quarterly or monthly. In times of crisis or significant change, the board will meet more regularly. As we touched on earlier, it’s vital for founders to adequately prepare for these meetings to ensure that the time is used productively. 


Five Reports to Share with the Board

During board meetings, founders will often present a slide deck that covers all pertinent information board members should be aware of. In addition to this, founders should also share a series of reports with the board ahead of time. This ensures that board members arrive at the meeting with an understanding of the issues that are to be discussed. 

Key board reporting requirements for first-time founders include:

  1. Performance Overview
  2. Income Statement
  3. Balance Sheet
  4. Cash Flow Statement
  5. Other Important Non-GAAP Metrics

Let’s take a closer look at what’s involved in preparing each of these reports. 


1. Performance Overview

Your first report should contain a performance overview that expresses all of the key performance indicators most relevant to your business. In this report, include metrics like new bookings, current revenue run rates, burn rate, and cash runway. Make sure you know these numbers, as the board will ask about them. 

In this report, you should also include commentary that outlines the progress the business has made toward key initiatives, such as the launch of a new product or the hiring of a key executive. 

The role of the performance overview is to provide board members with a quick summary of how the business is doing, highlight the main issues to be addressed, and align expectations ahead of the meeting.


2. Income Statement

A business’s income statement, also known as a profit and loss statement, displays the revenue, expenses, and net income the business realized during an accounting period. 

Founders should present this report alongside previous income statements to show how the business’s revenues, costs, and profits grow and change over time. Costs are typically broken out into several categories: Cost of Goods Sold (COGS), operating expenses, and non-operating expenses. Boards may review actual figures against the board-approved budget. 


3. Balance Sheet

The balance sheet explains the business’s assets, liabilities, and shareholder equity at a specific point in time. It should be provided alongside balance sheets from previous accounting periods.  

This allows board members to understand a business’s current cash position, its obligations to creditors, and its net assets. The financial data contained in a balance sheet can be used by board members to calculate several ratios that quantify the financial health of the business, such as the debt-to-equity ratio

Learn More: The Ultimate Guide to SaaS Business Accounting


4. Cash Flow Statement

In any business, cash is king. A cash flow statement shows how a business receives and spends money across three categories: operating activities, investing activities, and financing activities. 

For startups, the majority of cash flows will likely fall under operating activities. It’s also common for scaling startups to have negative cash flow. Negative cash flow is the same as burn rate: the rate at which startups spend capital from investors to fuel faster growth. By understanding this number, investors can verify a business’s cash runway and understand when the next round of funding should take place. 


5. Other Important Non-GAAP Metrics

In addition to the reports outlined above, it’s also important to adopt a series of non-GAAP metrics that are effective in tracking the progress of the business toward its goals. 

This could include metrics such as Adjusted Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA), as well as other metrics including bookings, billings, recurring revenue, net dollar retention, churn rate, and customer acquisition cost

Learn More: 8 Critical Financial Metrics for SaaS Businesses


Smarter Board Meeting Preparation with G-Squared Partners

As a founder and CEO, you have a million things on your to-do list. Preparing for board meetings is important, but so are dozens of other tasks: recruiting top talent, overseeing your engineering team, reviewing next quarter’s marketing plan, and so on. 

Fulfilling your board reporting requirements takes time, but it doesn’t have to be your time. By working with an outsourced CFO service, you can delegate the collection and organization of all the financial data and reports required before a board meeting to an external partner with deep domain expertise. 

At G-Squared Partners, our team of experienced financial leaders is well-equipped to help founders prepare for board meetings and satisfy all reporting requirements with a collaborative, strategic approach. 

To learn more about the services we provide, contact us today