Are you also one of those who likes to watch video content? Watch new videos each week here!
Are you also chai lover? How about bringing your love for Chai and entrepreneurship together and become a Chaipreneur?
Doing a year end review of your business is essential for small business owners to plan better for future activities. Here are a few suggestions on how to go about this.
The end of the year is a great time for small business owners to step back and take a good look at their business. As an entrepreneur, you must answer two simple questions:
If you do not review your past work and plan for the future, you are simply leaving money on the table. There is just so much to gain from the review process, and if you have never done this before you should definitely start this year.
In this article, I will share a basic approach to year-end review and stocktaking.
Start by looking back on the major milestones you have achieved this past year. When you do this preliminary review, focus on your accomplishments to set the tone right. Give yourself a pat on the back. While we celebrate the highlights, very often, the low points tend to linger. Remind yourself of all the small and big things you have achieved this year, and think about ways to repeat them.
Core business activities include sales and marketing, daily operations, business finances, and employee management.
“The most important performance metric for a small business owner is growth in actual profits, month on month,” says Rahul Jain, CEO of Business Coaching India. Jain cautions against assessing performance on the basis of revenues alone. If your profits are not steadily increasing, you need to take a closer look at your business.
Which products and services that you offer are bringing you the most profits? What exactly do you need to do to optimize the operations around these products? Also, which products are failing and pulling your profits down? Are there any changes that you need to make immediately to improve the production or distribution process, marketing, sales, or price?
“20% of your clients or products fetch 80% of profits. The key is to identify these high-margin products and focus more on them,” says Jain.
Measure your sales performance and marketing ROI against the business objectives. Along with this, you should also analyze the industry and the market. One of the best ways to do this is through a simple SWOT analysis. You analyze your Strengths, Weaknesses, Opportunities, and Threats and plan accordingly for the next year.
If you are a small business, you may not have a formal employee review process. However, evaluation of your employees is an invaluable way to understand the contributions of all your staff members. Use this opportunity to recognize achievement and also ensure that your employees’ goals are aligned with your business objectives.
For employee evaluation, Jain suggests starting with the identification of useful parameters to measure performance against. “Write down what you expect from your employees. Convert these expectations to something you can measure in numbers. Only numbers can hold a person accountable,” says Jain.
“Do a weekly review, and do it on a Monday rather than Saturday. We find that this approach works best for all our clients,” adds Jain.
If your accounts have been done just for the purpose of managing taxes, it may not give a clear picture of where you stand. “Track your actual expenses and income on a regular basis. Simply open an Excel sheet and diligently update it,” Jain suggests. If you haven’t done this so far, start now.
Overall, you will need to review the following aspects:
Have you been able to stick to your monthly budget? When have expenses increased beyond your budget? How would you tackle similar situations should they arise in the future?
Do you have sufficient cash flow? Are you able to forecast cash flow trends? Can you anticipate cash requirements and prepare for them in advance? What is your contingency plan? What are your profits like? Consider all the costs and think about whether you need to adjust pricing.
Have you taken any loans for the business? Have you made all the repayments on time? Do you need to borrow more money for next year?
Also start preparing for taxes. Do what you need to maximize your deductions and be prepared when you have to file taxes.
An entrepreneur does not have a boss, so how do you gauge whether you have done a good job? Self-assessment is vital because a business is simply an extension of the people who manage it, and mirrors the abilities of those individuals.
You may be able to improve the performance of your business with an honest assessment of your own knowledge, business skills, ability to solve problems, willingness to persevere etc. You will also identify weak areas where you will need training or assistance.
A good place to start is by preparing a detailed resume which lists your qualifications, experience, and responsibilities and requirements of the job. Use the resume as a guideline and assign competency levels in each area. The very act of thinking about, identifying, and categorizing your strengths and weaknesses can be quite informative. Use this resume to make an objective assessment about yourself.
You can also employ a 360-degree feedback where your own employees and peers evaluate you anonymously. This will help you understand how others view you, and make suitable changes or improvements.
There is more to a successful business than just high revenues. Track actual growth in profits and work towards that. As a small business owner, you will also need to consider whether you and your team have executed challenging projects, or delighted your customers.
Set aside a little time this December to step back and look at what you have been able to build and accomplish so far.
Evaluation concept image via Shutterstock
Nisha Salim is a self-employed writer and a social media junkie.
7 Great Ways To Use Twitter For Small Business Owners
A Tale Of 5 Women: Is Having A Baby The Solution To All Your Problems? Think
Want To Achieve Your 2019 Goals? Start By Examining How 2018 Went For You
It’s Your Life: Make Your Own Decisions
Get our weekly mailer and never miss out on the best reads by and about women!