How to perform an end of year review of your small business
Managing a small business is one of the busiest and most demanding jobs out there, so we’re sure the end of year holiday season, and the chance to take even just a few days off, can’t come soon enough! Countering this, we’re sure you’ve heard the scary statistics flying around about how many small businesses fail each year and how many don't have a long-game - in fact, only 30% will make it to their tenth year of business.
This can make it tempting to put in more hours and neglect the chance to rest and recuperate, but remember that your business needs you fully firing more than it needs you in the office every hour of the night and day! It’s important to rest when you get the chance, and one of the things you can do to put your mind at ease is take the opportunity over the holidays to ensure everything is in good order. Good discipline is a key factor on how long small businesses last, and so taking stock with an end of year review for your small business is a valuable activity.
In this post, we look at four things you should consider in an end of year business review to ensure that your company is in good shape, has learned from the last 12 months, and is ready for all the challenges and opportunities that the year ahead may bring.
Get your finances straight
This seems a pretty obvious place to start, as your business needs money to keep the wheels turning and the lights on, but it’s often easy, and tempting, especially during busy periods, to merely know that “enough” money is coming in. However, the better you understand the financial side of your business, the better your chances of making it a success. Poor cash flow management or a poor understanding of their cash flow are among the reasons for failure of 82% of businesses. Now is your chance to beat that statistic! Really taking stock of your financials can make a huge difference to your business.
Check all your outstanding accounts with any suppliers, partners, and contractors are paid in full or tallied so that you’re satisfied you know exactly what you have in the bank. Next, check your own accounts receivable to see if you’re due money from any sources, and send out invoices, reminders, or late notices where applicable. For completeness, collect and archive your payroll data, invoices, bills, and transactions.
Now you’ll be able to check your profitability and compare it against the industry average. If you’re above average, great! That gives you the chance to further your advantage over the competition and reward your employees. Bonuses can come into play here to further motivate your employees. If you’re below average for the industry, it’s time to consider where you can achieve greater efficiencies in how you operate and to think about how you can save on costs or improve sales.
Review your sales and marketing efforts
The end of the year is a good chance to look back at your sales efforts and promotional campaigns and learn a few lessons. See if you can estimate your return on investment for your marketing across various channels. See what you did right with these high profitability methods and look to replicate that in the year ahead.
Whatever channels you’re using, are they working for you? Could alternative marketing methods work better? If you don’t have the resources to run the whole range of social media, printed marketing, website, reviews, networking sessions, and more, consider swapping out one low-performing area for something new you haven’t tried yet.
Streamline your operations
There are countless ways you can make your small business more efficient, but the holiday break is a good chance to take a look at some of the bigger things while you’re likely to be closed or at least in a quieter period.
First up, undertake a quick assessment of your suppliers. Do you have up to date contacts for each one? You may be able to strike off inactive, closed, or unreliable vendors. Even if everything is up to date, there could be suppliers you aren’t completely satisfied with, or better value alternatives to existing relationships.
With your suppliers organised, consider any physical inventory you may have, either of stock and just supplies, and consider whether you may need to place further orders ahead of busy periods ahead. For a more in depth look at this, you can check out our guide on predicting and preparing for peak times. Consider how any stock levels fluctuated throughout the year? Did you over-purchase certain products or were you left short?
The same analytical approach can be applied to your staffing levels. Did you have the right number of employees in at any given time and was your turnover rate acceptable? If there were any imbalances, consider adding an extra shift for busy times—a quick and easy task with Findmyshift! Equally, if losing members of your team was a problem, you can read our tips for improving employee retention.
Your online presence is the last big area to consider improving. Make sure your website is clear and easy to navigate, with any dead-end or “orphan” pages removed - doing this clean-up will keep you in Google’s good books. Also look at loading times, your presence as a local listing, and how easy it is for potential customers to get in touch or make a purchase.
Set next year’s goals
After all your hard work this year, the last step is to plan how you’re going to build on it next year! With all of the above activities completed, you should have a good idea of what improvements can be made going forwards and what realistic new targets might be for sales, employee growth, profitability, and more. Do you want to hit certain sales targets, hire a given number of new employees, explore a new promotional channel, or capture a given market share?
Whatever you decide, make your goals realistic, manageable and trackable, and then all you have left to do is look forward to a prosperous year ahead. Oh, and take a bit of time to relax over the holidays too!