How is your business doing? Have you conducted a business review lately? As the year draws to a close, there is no better time to start planning again - and this invariably means taking stock of the business year, reviewing your market position, and deciding where to take your business next year.
Conducting a holistic year-end review has meaningful benefits for every small business owner - not least of which is planning for and positioning your business for economic recovery in the year ahead. Below are some tried and tested tactics you can employ to review your business performance.
Give Yourself a Pat on the Back - Focus on Your Accomplishments
Where better place to start than focusing in on what your business has done well - a year is a long time in business and while we celebrate the highs, it is often the lows that stay with us. Remind yourself of your successes and consider ways to repeat them. Then take stock of key areas of your business including core activities, sales and marketing, employees, and business finances, here are some things to consider:
1. Assess your Core Activities (i.e. What you Do and Who Your Market Is)
Core activities essentially encompass your business operations - areas to assess include your core products and services as well as your customer base. Ask yourself questions such as:
Which products or services are the most profitable? How can you optimize operations around the success of these?
Are any products that are failing? Are there any changes you can make to enhance their sales or profitability (production, distribution, sales, marketing, price, etc.)?
Are your products or services still aligned with your target market? Has your core customer base changed in the past year, what market forces impact your customer base? If the answer is yes, you may need to go back to the drawing board and assess what your customer needs are. Read this Market Research Guide to help you make more informed decisions about your market.
What can you do to optimize your cost base? Many businesses have closed their brick and mortar establishments to operate online only (get tips on starting an online business). Others have become home-based to save costs. Where can you realize efficiencies?
What do your customers think of you? How "customer-centric" is your approach to business?Successful businesses watch the customer, become the customer, and involve the customer. Get tips from SBA guest blogger, Rieva Lesonsky, on how to Get the Customer Service Edge.
2. Conduct a Sales and Marketing Review
In addition to measuring your sales performance and marketing ROI against your objectives and business plan, a full sales and marketing review should also include an analysis of market forces and the benchmarking of your business against the competition - an efficient way to do this is to conduct a SWOT analysis. Tim Berry offers some tips on how to do this here.
3. Evaluate your Employees
Annual performance reviews are traditionally always something that managers and employees alike tend to dislike, if not dread. But a well prepared and honest performance review is an invaluable way to base line employee performance (strengths and weaknesses), recognize achievement, and ensure that individual goals are aligned with overall business goals. Get more tips on employee performance reviews in this blog.
4. Review your Business Finances
Every business is different so it's worth talking to your accountant about your individual circumstances, but as a guide you will need to review:
Budget - Do you have one and are you sticking to it?
Cash flow - Is it sufficient? Can you forecast cash flow trends so that you can anticipate problems and prepare for them in advance? Do you need and have a contingency plan?
Profit - What is the state of your gross profit margin?
Cost Base and Pricing - Review your cost base (constantly). Do you need to adjust pricing - how will this impact your customer relationships?
Borrowing - Are you staying on top of your business loan or overdraft obligations? Should you options for refinancing?
Taxes - Get a step ahead of tax season pressures now to help maximize your deductions and sail through tax season.