Charts

Using charts to visualize data helps your audience quickly understand and interpret what that data means, greatly streamlining the communication of detailed information.

Charts are typically created in a spreadsheet program, and then inserted into a document or presentation.

For example, if you had a spreadsheet of business expenses in Microsoft Excel, with only a few clicks, you could generate several types of charts to visualize those business expenses. These charts can then be inserted or copy-and-pasted into a Microsoft Word document or PowerPoint Presentation.

The most common types of charts used in the business world are pie charts, bar charts, and line charts.

Pie charts are used to show percentages, with each category corresponding to a slice of the pie, and the size of the slice corresponding to a percentage, with the entire pie representing 100%.

Bar charts are used to display data across different categories, with each category represented by a rectangular bar. The height of the bar in vertical bar charts, and the width of the bar in horizontal bar charts, corresponds to the value associated with that category.

Line charts are used to visualize trends over time, with data points connected by continuous lines. The horizontal axis typically represents time, while the vertical axis represents values. The slope and direction of the connecting lines indicate the rate of change, with steeper lines representing more significant changes.

As pie charts only show percentages, there is not a lot of choice in how your data is displayed. When creating bar charts and line charts, however, there is quite a lot of flexibility in the type of data you display and how you display it.

Before creating a bar or line chart, you must first decide what data you want represented horizontally across the bottom - called the X-axis; as well as vertically along the left side - called the Y-axis.

When displaying time-based data, the convention in business charts is to display time on the X-axis - along the bottom - so that time increases from left to right. Then, whatever value is being shown for each segment of time would correspond to the Y-axis - along the left side.

For example, if you had a bar chart that showed revenue for the year, the horizontal X-axis would have 12 segments corresponding to the months of the year, each with a label starting with January on the left-most segment, and ending with December on the right-most segment. The height of each bar would then correspond to revenue, labeled in increments of money on the vertical Y-axis.

Depending on the size of the bar chart, it might also be a good idea to include the actual dollar value at the top of each bar. If the month of July had 10 million dollars in revenue, people would have to visually line up the height of the bar to the dollar values on the Y-axis, but if you have the space to display it clearly, it is often easier on your audience to add a label of 10 M - M for Million - to the top of the July bar. As a general rule, if you have the space to add a label so that someone doesn't have to try to visually line up a value to the Y-axis, it's a good idea to do so, so long as it does not create visual clutter, which will tend to happen as the number of bars in your chart increases.

While bar charts can have any values represented on their X- and Y-axes, line charts tend to primarily be used to show trends over time, resulting in line charts usually having segments of time on their X-axis. This practice is so common, that if you are ever using a bar chart to show how a value changes over time, it is a good idea to either overlay a line chart over the bar chart, or to simply switch to using a line chart.

Line charts are arguably the most valuable type of chart in the business world, as they simultaneously answer three of the most important questions every business needs to know: What happened in the past, what's happening right now, and what might happen in the future?

A typical use case for business line charts is revenue over time, with dollars on the Y-axis, time on the X-axis, and lines connecting each point in time, creating a line from left to right showing past trends leading up to the present.

A common pattern everyone in the business world knows to look for is a downward-trending revenue line chart - which is very bad, as that indicates the trend of falling revenue will continue; and an upward-trending revenue line chart - which is very good, as that indicates that the trend of rising revenue will continue. More disconcerting is a revenue line chart that jumps around erratically, as it's very hard to make useful predictions as to how the future may play out.

When including charts in a document, each chart should be placed within a well-thought-out layout so that they make sense in the context of the content that surrounds them. When using a chart in a presentation, it's often better for the audience if there is only one chart per slide, with the contents of the chart being the main takeaway of the slide.

An important consideration is whether to rely exclusively on color to communicate categories of data, which is usually done through the use of a legend that lists colors next to the category label they correspond to.

For example, in a pie chart, each slice will correspond to a category of data, which will correspond to a unique color. If we only use a color-coded legend to correlate category to color, people who have trouble seeing differences in color will not be able to read the chart well, or at all. Fortunately, the solution is to simply label each slice with the name of the category, which is an option you can choose when generating a pie chart.

The problem with using only color to indicate categories is also present in grouped bar charts - meaning bar charts with multiple bars per category; stacked bar charts - meaning bar charts where each bar has multiple sections; and grouped line charts - meaning line charts with multiple lines. Generally, as much as possible, try to use labels in combination with color to make your charts accessible to as wide an audience as possible.

Learning to use charts to visualize data is an extremely valuable skill in business communication. By spending a little extra effort to generate charts, otherwise dull documents or boring presentations can be made exciting, engaging, attractive, and informative, while also enabling your audience to make important decisions that are often critical to the future success of your organization.