The Annual Report
by Sylvia Allen
Editor's note: This is the tenth article in a 10-part article series on SPONSORSHIP DEVELOPMENT, contributed by Sylvia Allen, President of Allen
Consulting, Inc., Holmdel, NJ.
Reading the Annual Report
Annual reports showcase a company to its customers and stockholders. You can get them via the internet or by calling the Investors Relations department of the company. The introduction sets up the rest of the report by making a good first impression. It often features a letter from the chairman to the stockholders describing the previous year and plans for the future. By reading this section closely, you can generally figure out what the company considers important, what is happening that's exciting and what problems the company expects to face. Look for a company overview as well as important information about the company's structure, markets, products and customers.
Finally, just before the financial information, you'll find a more objective explanation of operating results. A word of caution: Companies want to use the introduction to paint as flattering a picture of the company as possible. As you read, look for the following information.
- Vision or mission statement - Mission statements can help galvanize and unify employees for a common goal. Also, if the company makes purchasing decisions with its mission in mind, you need to know what that mission is.
- Strategies for achieving the mission - These plans should tell you a little about the economic constraints of the business environment and describe how the company will use its resources to gain a competitive edge and reach its goals. Most companies list between three and five specific business strategies. Analyze them carefully and decide how your sponsorship offering can make each one more effective.
- Principal lines of business - Many large companies actually comprise several businesses rolled into one. The more you know about the different businesses they're in, the more selling opportunities you may find. Pay close attention to recent acquisitions to find out where the company is headed and what new markets it holds for your sponsorship.
- Customers/target market - Your sponsorship will be much more appealing if it helps the company's customers in a cost effective, measurable way. Annual reports often illustrate how the company has served its customers. Study these examines to help you understand how the company adds value for its customers.
- Challenges and problems - Focus on any mention of current or future competition, industry or economic trends or how the company's target market perceives its products and services. Presenting yourself as a problem solver gives your prospect one more good reason to buy.
- Measurements of success - Although some measurements of success are consistent from company to company, individual businesses measure achievement in different ways. Present the benefits of your sponsorship in terms that are meaningful to your prospects, and they'll recognize the value of what you offer - and that your selling approach is truly customer-oriented.
- Sources of competitive advantage - In some industries, a business gains a competitive edge from being a low-cost producer. In others, it might be more important for a company to develop new products faster or make deliveries promptly. To sell your customers on competitive advantage, you'll need to know what your customer must do to gain that advantage.
In this section, pay closest attention to the company's income statement. To help you understand what you're reading and what the figures mean, remember 1) the numbers acquire meaning only in comparison with a company's past performance and to other companies in the industry, 2) percentages are more important than absolutely numbers, and 3) numbers only offer clues as to a company's performance - they tell you the final score, but not how the game was played.
If contemplating your prospect's income statement leaves you wondering where to begin, follow this four-step plan:
- Analyze your prospect company's top line or total revenues. Did sales increase or decrease and why? How did revenue growth compare to industry trends? Was growth attributable more to volume increases or price increases?
- Skip down to the bottom line. Compare profit increases or decreases with revenue increases or decreases. How did profits compare to their peer group?
- Analyze the operating income figures. Also shown as earnings before interest and taxes, these figures should appear several lines about the net income figure. Operating income numbers are the best measure of how well company managers run the company's day-to-day operations. These figures factor out decisions about company finances and taxes and extraordinary events, where your products will have no impact anyway.
- Take a look at gross profit margins. A company's gross profits are a valuable measure of its effectiveness and ability to add value for its customers. Large revenue increases accompanied by lower gross profit margins, for example, may mean that the company can attract more business only through lower prices.
Since customers and prospects don't come with directions or an owner's manual explaining how to sell to them, why not take advantage of the next best thing? Competitive salespeople need to use all the resources at their disposal, and an annual report provides fast, easy access to valuable customer information.
It's impossible to know much about your prospects and customers. Annual reports are a gold mine of information and serve as a how-to guide for selling to any company that publishes one.
Why Use Annual Reports?
Here are three good reasons to make annual reports part of your selling strategy:
- To be more than just a vendor. Professionals want salespeople to know their business and industry, their sources of competitive advantage, challenges and opportunities - information you can find in many companies' annual reports.
- To earn the right to an appointment. You can use the information in an annual report to demonstrate a thorough knowledge of your customer's business that will help you get an appointment. The annual report can also familiarize you with the customer-specific jargon, financial measurements and current trends that will help you "speak the language" when you do get an appointment.
- To find out how you can help. Consider a company's annual report the scorecard of its performance. Careful analysis can tell you how you and your sponsorship might be able to enhance that performance - ideas you can then present to your customer in a persuasive presentation.
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About the Author:
Sylvia Allen offers a wealth of public relations, event marketing, and sponsorship experience to her clients.
She has published several books and is the author of HOW
TO BE SUCCESSFUL AT SPONSORSHIP SALES, publishes
The Sponsorship Newsletter, has just finished a 60 minute video on
sponsorship, and lectures all over the country on sponsorship (IFEA, National Main
Street, etc.) as well as teaching at New York University.
She has sold everything from $25 to $4,000,000 sponsorships;
she can be reached at 732-946-2711
or at email@example.com
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