This time of year, it seems as if very little business actually gets done. Small businesses are busy partaking in holiday cheer, hitting the slopes and what not. It makes perfect sense of course, especially if you have had a busy holiday season, but let me suggest that before you shut things
down completely, there is one more thing you should strongly consider doing before the year is out:
Conduct a year-end small business self-assessment.
With the year winding down and business slowing down, now is the perfect time to take a look at where your business has been, and where you want it to go. Conducting this sort of comprehensive year-end review is tremendously valuable:
- As Michael Gerber famously said in the E-Myth, it is important to not only work in your business, but on your business. A year in review does just that.
- It is a chance to take a look at what went right, and wrong.
- It is an opportunity to get the perspective of your staff, and in the process, to let them know that you value their opinion.
- It allows you to make needed course corrections.
So, in this column and the next, we are going to look at how to conduct such a review, what it should consist of, and what you should expect to get out of it. This week, we will look at the year in review part, and next week we will explore how to use that to plan for the year ahead.
Begin by setting aside enough time to do your review.
Depending on your business, it may take a few hours or a whole day. It helps (but is not required) to conduct it off-site. Before the meeting, give your team an agenda of what you want to review and what you want to accomplish. Solicit their input. Then, on the day of the meeting, both the dress and the vibe should be casual.
Here are the things your “Year in Review” should review:
Begin with looking at the things you, your team, and your business did right. What were your wins? How did you accomplish them? What are the lessons to be learned that can be taken forward?
2. Direction: Are you headed where you want to go? Business plans are, of course, working documents. Once you have been in business a while, you will have a better understanding of whether your original business plan was on the money or off the mark. So dust it off and take a look. It is worth seeing whether the goals and projections you had a few years ago have been met, and if not why not.
And then, update that business plan (either figuratively or literally):
- Where do you see your business headed in the next five years?
- What will it take to get there?
- What resources do you need to marshal to accomplish these goals?
3. 80-20: You know the 80-20 Rule of course – that 80 percent of your income comes from 20 percent of your customers. So yes, you need to see how you can better serve those valuable 20 percenters, but take this analysis even further. Which of your website pages bring you 80 percent of your page views? Which products or services are responsible for 80 percent of your sales? Really digging into these sorts of analytics can yield some very valuable insights.
4. Sales and marketing: Take a look at your major marketing campaigns this past year and assess their effectiveness. Are there other tools out there – like mobile marketing or Facebook ads or TV – that you can or should adopt?
5. Budget: Are you sticking to your budget? Where were your projections off and what course corrections do you need to make? How is your cash flow situation, what about your overhead and profit margin? Taxes?
Yes, the creative side of business can be fun. Coming up with new ideas, closing the big deal, all of these sorts of things get an entrepreneur’s engine revving. But you only get to do them if you are also a good businessperson, and that means knowing your numbers.
6. Operations: Are you effective? What sorts of processes can you adopt to make your operation run more smoothly? Do you need to bring in more help, new computers, or what?
7. The competition:
How are they doing? Do they have any strategies that seem to work that you can adopt?
The bottom line is this: Imagine that you were on a hike in the woods and you never consulted your map or compass. It is not unlikely that at some point you would begin to head in the wrong direction. A year in review is your chance to take out the map, see where you are, and make sure you are headed where you want to go.
How have you successfully reviewed your business in the past? Share your story below.
About Steve Strauss
Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest,The Small Business Bible, now out in a completely updated third edition. You can listen to his weekly podcast, Small Business Success, visit his new website TheSelfEmployed, and follow him on Twitter. © Steven D. Strauss.