How Do I Review My Small Business?

If you feel like the ups and downs of business mean you are doing something wrong; think again. Small businesses face continuous challenges and opportunities throughout the year, some of them you handle perfectly, and others get a bit messy. You can’t judge your business performance on how you are feeling or performing in that one moment, you need to step back and take in the big picture.

With so much happening around your business, it is crucial to conduct an annual review to take stock of overall performance and ensure the business is on track for continued success.?

Your review will evaluate your growth and financial performance, and highlight areas for improvement while giving you an opportunity to plan for the future and identify strategies that will help drive your business forward.

The year-end business review looks at your business targets and evaluates your yearly performance against those targets. No matter what type of business you have, the review will need to assess the overall financial health of your business. Even if money isn’t a driving force behind why you started, it sure as hell is a driving force that will keep your business moving forward and meeting more people’s needs, so understanding the financial side can’t be skipped.

Your review will also need to create a space for providing feedback and development opportunities for your team. By implementing this process, you can better understand your business's strengths and weaknesses and make informed decisions to enhance your performance in the coming year.

Key Takeaways

• For your business to be successful you need to set realistic and achievable goals for the coming year based on past performance.
• A review is a way to identify strengths and weaknesses to understand what's working well and what areas need improvement.
• When you review financial performance, including profits, losses, and expenses you can make informed decisions on budgets and resource allocation.
• Market Trends Analysis within your yearly business review allows you to stay updated with current market trends and adjust business strategies accordingly.
• Conducting a yearly business review gives you insight you can use that can significantly help steer your small business towards growth and success.

Identifying and Setting Targets

To effectively review your small business's annual performance, first identify and set goals with data , that way you have a base to compare your results with.

You are not only the business owner, you are the business leader so make sure you lead discussions and keep your team in the loop. It is crucial to involve everyone in your business in the process of identifying and setting targets, not just so that your team knows what they are doing and why (super important that they do), but also because it will foster a sense of ownership, accountability and satisfaction.?

Establish Annual Goals

Begin by establishing SMART goals for the year ahead. Ensure your goals are Specific, Measurable, Achievable, Relevant, and Time-bound.?

An example of a SMART goal for a business could be: Gain four new clients within the year while maintaining the current client base. You need to be able to break each goal into smaller milestones and include others with department-specific objectives. This will make goals more manageable, task-oriented and easier to monitor progress and success.

Align KPIs with Business Objectives

Key Performance Indicators (KPIs) are how you know if you are on track towards achieving your business objectives. As boring or strict as it may seem, you do need a way to quantify the performance of various aspects of your business and KPIs have proven their worth across every industry.

Aligning these KPIs with your annual goals ensures that your targets are effectively measured and areas in need of improvement are identified.

You don’t need to micromanage this or get fixated on the numbers, find a balance that works for you so you can keep your bigger business goals and passion front and centre. If this seems overwhelming or you don’t know where to start, ask a business coach for pointers or join a coaching community to get a sense of how other business owners are facing these challenges.

Consider the following steps when developing and aligning your KPIs:

1. Identify the critical aspects of your business that impact annual goals and objectives.
2. Determine the relevant KPIs that measure the critical aspect performance.
3. Set specific target values for each KPI, taking into account your SMART goals.
4. Regularly monitor and report on your KPIs to ensure progress towards achieving your goals.
5. Review and adjust KPIs as needed, based on the performance data collected and any foreseeable changes in future business conditions.

These steps help ensure that your business remains focused on achieving its annual goals as well as promoting accountability and continuous improvement.

Evaluating Performance

When you evaluate the annual performance of your business you get to see the strengths and weaknesses across each sector and make informed decisions that can drive future growth and success. Not just that, but you can improve satisfaction for yourself and your team and find more effective pathways to work smarter - not harder.

Utilise Data for Evaluation

One crucial aspect of evaluating your small business's annual performance is to utilise data effectively. Collect and analyse various performance indicators, such as sales numbers, customer retention rates, and employee productivity, to gain insights into your business's current performance. Your internal performance is just as important to consider as your external ones so be sure to factor in staff retention numbers, job satisfaction and employee productivity.

Monitoring relevant key performance indicators (KPIs) can help you assess your progress towards business goals.

Consider creating a simple table to track KPIs and progress over time:

Review Employee Performance

Examining employee performance can give you a more in-depth understanding of your team and individual contributions. Create regular discussion times one-on-one with your team which will include a performance review discussing their progress, goals, and any areas in need of improvement. This is a two-way street where they get to discuss their ideas and struggles with you to come up with working solutions.

Employee feedback can help make strategic decisions, boost morale, and align expectations.

Some considerations for reviewing employee performance could include:

• Setting and reviewing individual and team goals
• Providing regular feedback through training sessions or one-on-one meetings
• Recognising and rewarding outstanding achievements
• Identifying opportunities for employee growth and development

Assess Strengths and Weaknesses

Evaluating your small business's performance includes recognising its strengths and weaknesses. Conduct a thorough review of all internal processes , customer feedback, and employee input to identify areas of improvement and success. Capitalise on your strengths, and implement strategies to address weaknesses.

Some approaches you can adopt to assess strengths and weaknesses might be:

• Customer surveys and feedback
• Internal analysis of operations and processes
• Benchmarking against competitors or industry standards
• Regular team discussions to address concerns, share best practices, and identify areas for improvement

Development and Feedback

Staff development and feedback are crucial components of an annual small business review, as they directly influence the productivity and morale of the team. This process allows business owners to assess individual and team performances, identify skill gaps, and provide targeted training to enhance competencies.?

Business leaders who show care and compassion around staff development and feedback can successfully foster a culture of continuous learning and improvement, crucial for adapting to changing market demands.?

Importantly, incorporating employee feedback into your annual review creates a two-way dialogue, promoting a sense of value and engagement among staff. This feedback can reveal insights into workplace dynamics, potential areas for operational improvement, and employee satisfaction.?

Ultimately, prioritising staff development and feedback not only boosts individual and team performance but also contributes to the overall growth and resilience of the business.

Create a Development Plan

A crucial aspect of reviewing your small business's annual performance is having a development plan in place. The plan should outline your business's short and long-term goals, as well as the specific strategies to achieve them. Make sure your plan is easily adaptable to changing circumstances and includes regular review periods and milestones to accommodate these changes.?

Take into account the following factors:

• Market conditions and trends
• The strengths and weaknesses of your business
• Opportunities for innovation and growth
• Potential challenges and risks

A comprehensive development plan will prepare your business for the risks, challenges, and opportunities ahead.

Implement Coaching and Training

To ensure your team members maintain their skills and adapt to changes in your industry, implement ongoing coaching and training opportunities. Encourage professional development for all employees, including yourself and management, by offering:

1. In-house training sessions or workshops
2. External courses or certifications
3. Mentoring and coaching programs
4. Regular performance check-ins and goal-setting sessions

This supportive learning environment will not only enhance the overall performance of your business but also improve employee satisfaction and retention.

Provide Constructive Feedback

Regular feedback is vital for the ongoing improvement of your team members and business performance. It is essential to provide constructive feedback that focuses on strengths, areas for growth, and actionable improvements. Take the following steps when giving feedback:

• Be specific and clear in your observations
• Highlight both the positive aspects and areas for development
• Offer practical suggestions for improvement
• Encourage open communication and be receptive to their concerns

By providing constructive feedback, you can support your employees in their professional development and enhance your small business's overall performance.

Reviewing Financial Performance

While not always comfortable, regularly reviewing your small business's financial performance is a critical aspect of ensuring its long-term success, as it allows you to identify and address potential issues, set realistic goals, and maintain a healthy financial state. By focusing on key elements such as cash flow, revenue and expenses, and financial goals, you can effectively steer your business towards its objectives.

Analyse Cash Flow

A crucial aspect of reviewing your small business's annual performance is assessing the cash flow. Cash flow is the lifeblood of your business , as it determines the ability to meet financial obligations and invest in growth opportunities. Regularly analysing the cash flow statement can improve your understanding of the inflows and outflows of your business, allowing for better financial management.

Here are a few key metrics to analyse in your cash flow statement:

• Operating Cash Flow

Tracks the cash generated from your business's core operations, highlighting its ability to generate profits.

• Investing Cash Flow

Indicates the capital spent on acquisitions or investments, as well as any gains from the sale of assets.

• Financing Cash Flow

Represents the movement of cash from financing activities, such as obtaining a loan or issuing shares.

By keeping an eye on these metrics, you can identify potential issues and fluctuations in your cash flow and take appropriate actions to maintain healthy financials.

Review Revenue and Expenses

Regularly reviewing your profit and loss statement will provide a clear picture of your business's financial performance. The revenue and expenses must be scrutinised to understand the factors contributing to profitability.

1. Revenue: Examine your sources of revenue to identify trends and areas for potential growth, comparing the current year's revenue to past performance.
2. Cost of Goods Sold (COGS): Analyse the direct costs associated with producing your goods or services, such as materials and labour, to determine your gross profit margin (Revenue – COGS).
3. Operating Expenses: Review your business's fixed and variable expenses, including rent, salaries, and marketing costs. This will highlight any areas where you could potentially reduce expenditure to improve profitability.

Using the above data, calculate the net profit margin to gauge your business's overall financial health: Net Profit Margin = (Revenue – COGS – Expenses) / Revenue.

Planning for the Future

When reviewing your small business's annual performance, it is essential to look beyond the current year and assess its potential for future growth and expansion. To plan effectively for the future, consider the following key aspects:

1. Market trends
2. Customer needs
3. Business efficiency

Market Trends?

Stay informed on the changes in your market, new technologies, and emerging services that may impact your business. While you can’t know what’s ahead there are ways to prepare for the most likely circumstances. Keeping an ear to the ground on what your competitors are doing - especially what they are doing well - is a great way to read the future.?

The other thing to consider is your flexibility. Small businesses have an advantage here as they are more noble than bigger companies. Rather than waiting out a change in circumstances you can get ahead by thinking about how you can use the new situation to your advantage and meet customer needs by embracing the circumstances. The biggest part of this is a willingness to accept change and find the silver lining - mindset has so much to do with leadership and business success.?

Customer Needs

Understanding your customers' evolving needs will enable you to adapt your business strategies accordingly, ensuring continued relevance and success.??

By listening to what your customers are excited about, satisfied with and griping about you can get a glimpse into what their next needs and expectations might be.

Regularly update your business plan to identify and seize potential growth opportunities.

Business Efficiency

As your business grows, it's crucial to maintain a high level of efficiency in your operations. This includes improving productivity, optimising business assets, and managing risks. Improving efficiency will better position your business to tackle potential future challenges.

Consider the following steps as you plan for your small business's future:

1. Set clear and measurable goals: Outline specific business objectives for the coming year(s), such as revenue targets, customer acquisition, and market share expansion. These goals should be realistic, achievable, and aligned with your long-term vision.
2. Create an action plan: Develop a strategic plan to achieve your goals by breaking them down into smaller, actionable tasks and setting deadlines. Assign responsibilities to your team members and periodically review progress to ensure the plan remains on track.
3. Maintain financial stability: Keep a close eye on your business's financial health to support future growth and expansion. Periodically review your profitability, cash flow, and expenses to ensure that you are making sound financial decisions.
4. Embrace innovation: Embracing new technologies and innovative processes can significantly enhance your business's future viability. Stay up-to-date with industry developments and be open to change where it can drive growth and improve your operations.

Reviewing your small business's annual performance is an opportunity to plan strategically for the future. By identifying potential growth areas, maintaining business efficiency, and staying adaptive to evolving customer needs and market trends, your business will be well-positioned for sustained success and expansion.

If you need help completing your annual review, book a free ‘Business Coaching Meet and Greet ’ or feel free to ask any questions in my Facebook group .

How Do I Review My Small Business? - FAQs

1. How do I review a small business?

Reviewing a small business involves a comprehensive evaluation of various aspects. Follow these steps:

Financial Assessment: Examine financial statements and performance metrics to understand the economic health of your business.

Operational Evaluation: Evaluate day-to-day operations, identifying areas of efficiency and potential improvements.

Customer Feedback: Gather and analyse customer feedback to assess satisfaction levels and identify areas for enhancement.

Employee Engagement: Evaluate employee satisfaction, engagement, and productivity to ensure a motivated workforce.

Competitive Analysis: Conduct a competitive analysis to understand your market position and identify opportunities for differentiation.

2. How do you write a simple review?

Writing a simple review requires clear and concise communication. Follow these steps:

Introduction: Begin with a brief introduction, stating the purpose of the review.

Key Achievements: Highlight major accomplishments succinctly, focusing on the most significant successes.

Areas for Improvement: Clearly identify areas needing improvement or challenges faced, providing an honest assessment.

Future Goals: Outline future goals and strategies in a straightforward manner, emphasising the direction of the business.

Conclusion: Summarise the main points in a conclusion that provides a forward-looking perspective.

3. How do I review my business year?

To effectively review your business year:

Goal Assessment: Evaluate the achievement of goals set at the start of the year, considering what was accomplished and what fell short.

Financial Analysis: Scrutinise financial performance by analysing revenue, expenses, and profitability, identifying trends and areas for improvement.

Operational Review: Assess the efficiency of day-to-day operations, identifying bottlenecks or areas for enhancement.

Customer and Employee Feedback: Review customer feedback and satisfaction surveys. Additionally, assess employee feedback to gauge internal business health.

Strategic Planning: Develop a strategic plan for the upcoming year based on the review, setting clear goals and actionable steps.

4. How to conduct an annual business review?

Conducting an annual business review involves a systematic approach:

Prepare Data: Gather relevant data, including financial reports, operational metrics, customer feedback, and employee performance evaluations.

Organise a Meeting: Schedule a comprehensive meeting involving key stakeholders, such as executives, managers, and department heads.

Present Findings: Present the findings of the review, covering financial performance, operational highlights, customer and employee satisfaction, and any challenges faced.

Encourage Discussion: Facilitate a discussion to encourage input and insights from all stakeholders, fostering a collaborative approach to problem-solving.

Set Goals: Based on the review and discussion, collaboratively set strategic goals and priorities for the upcoming year.

5. What not to say in your annual review?

Avoid these pitfalls in your annual review:

Being Overly Negative: Refrain from using excessively negative language. Instead of focusing solely on shortcomings, frame feedback constructively, emphasising areas for improvement.

Vague Statements: Avoid using vague phrases that don't provide clear examples or insights. Specificity is key to meaningful feedback.

Making Assumptions: Base feedback on observable behaviours and outcomes rather than making assumptions about intentions or motivations.

Ignoring Positive Contributions: Don't overlook positive contributions. Acknowledge and appreciate achievements alongside areas for development.

Comparing Employees: Avoid making direct comparisons between employees. Each individual has unique strengths and areas for improvement.