Analytical Reports in Businesses- What it is and How to Write it
When businesses are creating a marketing, sales, or operational strategy, they typically rely on the data, or information they already have. Knowing the most popular services offered, or the demographics of customers can help owners adjust their course of action to increase their bottom line and improve operational efficiency. Because new transactions and customers cause data to increase and fluctuate on a regular basis, it may be difficult to utilize a single spreadsheet or summary to convey large amounts of information between different departments and stakeholders.
Analytical reports resolve this by allowing users to present a detailed, thorough analysis of data from as many departments as necessary. Employees can filter through data, understand which circumstances are causing problems, and then collaborate with others to find solutions. To understand how analytical reports can help improve problem-solving and decision-making, it's important to know their characteristics, benefits, and the types of analysis they are able to conduct.
What is an Analytical Report?
Analytical reports evaluate a strategy or business procedure by utilizing relevant data to help make informed decisions that will better the business. Analytical reports are essentially a specified form of business reports that evaluate a particular issue or set of circumstances within the company. Analytical reports also include recommendations on how to address the issue or set of circumstances at hand.
There are typically two types of data that must be address in the report in order to make a sound evaluation-
- Quantitative data is quantifiable information that can be used for statistical analysis. An example of quantitative data might be the amount of revenue a business generates over a one-year span. This type of data is numerical and factual.
- Qualitative data is non-numerical data that approximates or describes a situation or issue within the business. It is categorical because the data can be grouped according to specific fields. Qualitative data might be the demographics of customers who utilize a company's services.
How to Write an Analytical Report
The feeling of being overwhelmed at the prospect of writing an analytical report with not much experience is understandable, like for newer businesses starting out.
Fortunately, there are several tips that can help owners and employees write optimized reports and leverage the most out of their reporting software. Some of these include-
1. Use a Digital Dashboard
Reports can be written on spreadsheets, word documents, or files. However, these traditional methods tend to be time-consuming and awkward because report-making is not their primary function. In order to make accurate and user-friendly reports, businesses should utilize digital dashboards.
Online dashboards are visualization tools that businesses use to manage their overall operations. Dashboards house and manage data from different sources in one, easily accessible place. Utilizing visualizations such as charts and graphs, they communicate information to the user so he/she can create reports that allow for quick insights and evaluations. One benefit is that the information is accessible at any location through different devices, such as tablets and smartphones.
2. Use Dynamic Analytical Reports
Traditional static reports can be limited because they are composed of unchanging (static) information that cannot be easily updated or adjusted. Static reports can only be adjusted if the user goes back into the original document or spreadsheet and updates it.
Dynamic reporting software utilizes the most current data to generate customized reports. They also allow users to click on any relevant information within the report and gain more insight or details.
3. Pick the Right Chart
Picking the correct chart that conveys data findings is important because every type of chart has a different function. For example, pie graphs are useful for comparing different parts to a whole because the user's eye can quickly evaluate which portion of the pie is biggest/smallest. Reportingtools allow users to choose the best type of graph that works for their particular set of data. Some of these include multi-series line graphs, combination charts, pie charts, scatterplots, column charts, and single value charts.
4. Design Accordingly
Important data and insights can be overlooked if the design layout is not formatted neatly or in an organized manner. Some of the most dependable practices include-
- Avoid Chart Packing - Don't put too many charts and widgets into analytical reports because they can overwhelm and distract the user.
- Use Consistent Color Scheme - Try utilizing different hues of the same color to avoid overwhelming the eye. Also, don't use too many bright colors because it can make it difficult to read any applicable text.
- Display Data in a Visual Hierarchy - Put the most important data in an obvious location. Typically, the eye is drawn to the top left- hand corner. Make the format logical so the user intuitively knows where to find necessary categories and calls to action, such as the generate report button.
Key performance indicators are measurements that evaluate a company's performance. When creating a business report, users should consider which particular trends they hope to discover and which are most important to improving the company's performance.
The user can then track and dig deep into KPIs by utilizing a template that is appropriate for the type of analysis they need. Some examples include marketing, human resources, management, IT, finance, sales, and marketing. Each one addresses different concerns. For example, the marketing one may analyze cost per acquisition, cost per lead, sales target & growth, or goal conversion rate. A human resource template could address absenteeism, overtime hours, cost per hire, or dismissal rate.
6. Make the Report Accessible
Analytical reports should be digitally accessible to all authorized parties within an organization, as hardcopy reports are often difficult to keep track of and can end up lost or in the wrong hands.
By making the report accessible online, employees can log into the company dashboard at any time and access any necessary data when needed. This improves internal business intelligence because a greater number of employees can gain access to information and make evaluations more quickly.
Benefits of Analytical Reports
Analytical reports can be utilized for a variety of purposes, with benefits including-
1. Increased Communication
When employees are sharing the same information, there is more collaboration between them to identify problems and find interdependent and mutual solutions. For instance, if a company's sales have been staggering because there was a recent price increase in a service, the sales team could collaborate with management to find creative ways to address this problem. Perhaps different leads could be pursued who would be willing to spend more money, or the company could provide a discount if the service is utilized for a certain amount of time.
2. Increased Efficiency
When employees understand the circumstances within their department that create problems and know which steps to take to resolve them, it's easier for the company to be more productive and efficient. For example, an analytical report could determine that outdated machinery is contributing to a decrease in manufacturing efficiency. The manufacturing team could then take this report directly to management and allow them to see the data themselves. They could collaborate to determine solutions so production doesn't fall behind.
3. More Accurate Reporting
Quality reporting depends on quality data. The report tells the entire picture behind the data, including all of the necessary key performance indicators that affect business decisions. The report also utilizes graphs and charts that help users understand the information in front of them so they can act on it.
4 Types of Report Analyses
Though informational reports can offer insight into several key performance indicators, the most common analyses include-
1. Market Analysis
Owners should keep up-to-date with the current trends in the business environment so they can be aware of important external factors that affect their day-to-day operations. Market analysis reports can utilize both external and internal data in order to assist with making vital decisions regarding the company's marketing budget and campaign choices.
2. Financial Analysis
Many owners make predictions about annual revenue and business expenses based on past performance. Financial reports can compare previous financial forecasts to the actual results and help the financial team determine which factors contributed to the variance.
For example, if a company's gross margin as a percentage of sales increased due to a new popular service offered, it could be determined that the new service was a success and the business should continue providing it and expand its availability, if applicable.
3. Operational Analysis
Businesses typically survive by increasing productivity while simultaneously decreasing costs. Analytical reports can provide operational analysis by demonstrating how efficiently the company is running and ways to increase productivity.
For example, an analytical report could show that certain materials are delivered late every month due to an industry-wide shortage. The owners could then decide to find replacement materials from another vendor, or temporarily pre-order ahead of schedule to avoid this predicament.
4. Trend Analysis
Companies often look at external and internal marketing trends in order to conduct data analysis. They can evaluate different metrics, such as the spending habits of consumers based on current economic trends. They can analyze these metrics by utilizing software reporting tools in order to gain more insight into how certain metrics are performing over a period of time. Trend analysis tools demonstrate how these external metrics might affect internal business operation, and then creates a report that validates it.
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