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As a small business owner, it’s easy to get caught up in the day-to-day flow once your business is running smoothly. Instead of just maintaining the status quo, though, it’s important to step back and reflect on your business to evaluate what’s working, determine what isn’t, and plan for the future.
At the end of each year, make time to do an annual review of your business so you can measure success and identify areas for improvement. To help you conduct a year-end review, we’ve put together a guide so you can assess your business’s performance over the past year and strategize for the new year.
Set aside time.
This one may seem obvious, but if you don’t schedule time for a thorough review, it won’t happen. Make it a priority. We suggest designating a specific week for your annual review, and scheduling some time each day for the process. And don’t let it slip — it’s important for your long-term success and you owe it to your business.
Establish your success metrics.
Before you can conduct a meaningful annual review, you need to establish your success metrics. These vary depending on your business model, of course, but regardless of your business type, you need to establish specific revenue objectives for each year (or even each quarter). Along with those, you need to determine your “soft metrics,” or subjective criteria for success (e.g., improved customer satisfaction). Once you’ve established those, you need to figure out how to measure them. If you’re evaluating customer satisfaction, for example, you may want to measure that by using surveys or questionnaires.
Review your finances.
First and foremost, you need to assess your company’s financial situation, as that’s fundamental to your business’ success. To do this, you should review these three key financial documents:
Cash flow statement: This is a financial statement that summarizes the amount of cash and cash equivalents entering and leaving your company.
Balance sheet: Your balance sheet illustrates your company’s net worth by showing its assets, liabilities, and owner’s equity.
Income statement: This shows your net income for a specific period of time, such as a a year. Your net income equals the revenue minus the expenses for that specific period of time.
When you look at these documents together, you get a clear picture of your company’s financial health. Not only that but also you can measure how you performed against the year’s revenue goals.
Are you using available technology tools to save time and money? While it may be an investment up front, automating time-consuming and tedious tasks like time tracking and payroll can increase efficiency and save money in the long run. Take inventory of your administrative tasks and see if there are additional opportunities for automation. By doing this, you can free up your time (and your employees’ time) to focus on strategic management tasks and customer service. As a small business owner, this is especially important as you may have a limited amount of staff members.
Conduct performance reviews.
Your employees are critical to your success, so it’s important to get their feedback. Set up annual performance reviews with them to see how they’re doing. These regular checkpoints give you insight into whether your employees are happy, and what you can do to keep them motivated and engaged. When employees are engaged, they’re more productive, which ultimately affects your business’s performance.
Celebrate your successes.
When you’re doing an annual review, it’s easy to overlook your successes and focus on the areas that need improvement, but don’t forget to recognize and acknowledge your achievements. It’s good for morale, and it’s also an opportunity to analyze what’s working and why.
Set your goals for the new year.
Review your goals for the previous year and see how you performed. Did you attain your goals? Where did you fall short? After a detailed review, decide how you should adjust your goals for the upcoming year. Make sure to set short-term and long-term goals, and create well-defined plans for achieving them.
Once you’ve set your goals for the new year, make sure to revisit them on a regular basis (either monthly or quarterly) to see how you’re doing. By setting and tracking measurable goals, you will continue to grow and improve your business.