Want to know how to end the year strong as a small business? Running a small business involves keeping track of a lot. From financial quarterly reports to where you set down your coffee cup, it’s only natural that things might slip past you every once in a while. Luckily, as you prepare to close the book in 2021, you have an opportunity to take account of your year in its entirety.
We’re talking about your annual business review.
This performance review should outline everything your business has been through over the past 12 months, including your biggest successes as well as your more trying moments. From accountability to data-driven analysis, read on for everything you need to know to make your business performance review a hands-down success.
#1 Revisit your goals
What did you set out to do? Whether you’re aiming at being the top-selling business in your neighborhood or setting a goal to earn a prestigious award in your industry, every business needs clearly outlined short and long-term goals.
Your yearly business review is a good opportunity to see how many of those long-term goals you’ve reached and start to look for business tips for the New Year.
Pair the analysis of your key performance indicators (KPIs) with a few self-reflective questions such as:
- What challenges did we face?
- What new skills did we learn?
- How can we avoid the mistakes we made for the upcoming year?
- How can we repeat our successes?
These open-ended questions leave room for a dialogue to be had with your entire team, allowing for a constructive environment for team building and brainstorming about what can be improved upon in the year ahead.
#2 Examine the fundamentals of your business
Every business offers a product or service to its customers, and the yearly review is a good time to reexamine how well your fundamental business practices are functioning.
The day-to-day experience of running a business is often filled with addressing client personalities, operations management, and upcoming projects. Consider this as an opportunity to do a deep dive into the core of your business and find areas with the potential for improvement.
Review the basics of your business practice such as:
- The value propositions of what you offer – Identify your customer needs and how your business aims to fulfill them. Get specific and try to elaborate on why your business, in particular, is the best pick for your customers.
- Quality control inspection – Take a good look at what you’re providing your customers. Are you delivering the same (or better) quality of service? High standards are hard to live up to, but keeping a close eye on the caliber of your goods or services is important for any strong and successful business.
- Your best-selling product or service – Ranking your offerings by popularity is a clear way to identify your successes. Explore the reasons why certain products or services are more in-demand than others—from marketing choices to price models—and you may figure out a formula for success across the board.
#3 Make financial evaluations
Perhaps the most important part of your review is determining where you stand monetarily at the end of the year. While it often takes time for small businesses to begin turning a profit, documenting your progress is essential.
To properly evaluate your businesses finances, pay special attention to the following figures:
- Cash flow – Money comes in, money goes out. Sales and expenses are at the core of your business, so getting a specific figure for your overall cash flow is key to understanding the economics of a business. Compare your cash flow to the previous years for a greater perspective on your financial forecast in the year ahead.
- Cost base – Are you getting the best price for your business materials? Reflect on your cost base and compare it to your prices. You may find you need to raise (or lower) the cost of your products to keep up with costs.
- Financial growth – As your business expands are you taking on new costs and sale opportunities? A larger staff, a second location, and new technology can all be growth expenses necessary for earning more income. Go over the various factors for expansion in your business and where they’ve taken you over the course of the year.
If your small business doesn’t have an accountant on staff, consider hiring an outside professional to assist with the financial section of your annual review. While you may have a good idea about your business’s general health, a financial expert may be able to paint a clearer picture of your year in review.
#4 Revise the data
It’s time to crunch the numbers. Taking a look back at your company’s annual data can be of use when identifying potential red flags in your protocol or hard-to-track successes you may not have otherwise discovered. Besides basic accounting and management software, there are plenty of tools to explore your business analytics.
Massachusets-based restaurant owner, Duncan Russell, calls himself “Super data-driven,” adding, “I’m working on my inventory management sheets, I have a personal order guide that I created, and I have checklists for everything.” Find a system that works for your industry or consider updating the one you currently use.
To start, consider reviewing data including:
- Engagement levels – Just because you’re sending out promotional materials, doesn’t mean customers are clicking. By keeping tabs on clicks and sales, you can see what marketing strategies were most successful over the past year. Use this information to help redesign your marketing plans for next year.
- Location data – By tracking geolocation data on your website, you can determine where your sales and leads are coming from. This may give you a better idea of your demographics and general customer-base, for a stronger, more personalized marketing strategy.
- Feedback – Allowing your audience to share their feedback is one of the fastest ways of tapping into specific, actionable data. You can create online or in-person surveys and offer rewards for product reviews. Redesign your services according to the feedback you receive, and you may see a significant boost in sales and repeat buyers.
- Visibility – Did your customers discover you from a search engine, a personal referral, or a social media platform? Knowing what avenues guide customers to your business can be particularly useful when determining what mediums of marketing work best. Whether it’s a matter of connecting with your audience via direct messages or getting the word out by posting fliers at the local community center, the road to success looks different for every business.
#5 Study your market
Part of designing your business plan likely included a market analysis. While much of what you discovered may still hold true, not everything goes according to plan.
Much of what you outlined may have changed since your initial analysis. As part of your annual review, it can be helpful to identify the various factors that have made an impact on your market. You can leverage this assessment to discover ways to pivot your business toward wider success.
Take the time to study aspects of your target market, such as:
- Customer needs - As business trends evolve over time, so, too, do your customers’ needs. Now is an opportune time to reflect on how your systems can better support your customers’ pain points. Matt Vigh, a real estate coach and co-owner at Prospect Boomerang Coaching, for example, is choosing to focus on simplifying transactions for his buyers and sellers. Vigh says, “I want us as an industry to use tech to help with transaction details so that as agents, we can truly focus on the needs of the people! Now we can stop being trapped in the whirlwind of transaction and get caught up in the relationship with the people who are doing the transaction.”
- Economic changes – While the general economy has national (and international) consequences, you don’t necessarily need to focus on country-wide economic shifts. Sometimes your local economy has a lot more impact on how your business performs. Whether there are more job opportunities or a general increase in local wages, there’s the potential for it to have major effects on your business.
- Competitor status – How many competitors have you inspired? While imitation is the most sincere form of flattery, it can make for more difficult business when you’re competing against similar small businesses. Thoroughly review where your business stands in comparison to competitors. Reinforce the reasons why customers choose you over the competitors or carve out a new space in which to insert your competitive advantage.
This could also be a perfect time to reach out locally, speak to your community, or establish a social connection. One Washington-based real estate group has found more success in teaming up with local businesses, stating, “We continually look for opportunities to partner with local businesses and be part of the community.” Tap into the neighbors and businesses in your zip code by creating a Business Page with Nextdoor.
#6 Lay the framework for a new strategy
Much of your annual review is about reflecting on the past year, but the process wouldn’t be complete without evaluating your plan for the year ahead.
With a solid grasp on how your business has evolved over the past 12 months, it’s worth it to consider developing new strategies for things like:
- Your bottom line – Setting realistic financial goals for the next year can be helpful to see your business plan in the long term. Whether you’re looking toward doubling potential profits or hoping to gain a percentage or two, having a clear target always helps.
- Potential upgrades – New computers, redesigned software, or improved communication services could be key to your business strategy for next year. Solicit feedback from your team to find out what resources they need to increase their productivity.
- Non-financial goals - While making money is a necessity for a business to survive, it can be helpful to craft non-financial goals to add another layer to your company’s mission. Consider the Hawai'i-based lumber company that, in addition to building a profitable business, is committed to sustainability and local sourcing. What values drive your business forward? Find ways of weaving them into your business model as you complete your annual review.
#7 Share your success with your neighbors on Nextdoor
An annual review is more than just accounting for everything you’ve done in a year, it’s an occasion to celebrate all your hard work and look forward to future success. Whether you’re sharing the year’s highlights, updating your audience about what to expect in the new year, or asking for feedback from local customers, tap into the tools available to you on your Nextdoor Business Page.
Nearly 1 in 3 households are on Nextdoor, making it the best place to start a conversation with your neighbors. By becoming a Neighborhood Sponsor, sharing special promotions, and making new connections on Nextdoor, next year’s annual review might have even more to celebrate.
Sources:
The Berkshire Edge. BUSINESS MONDAY: Christo’s Famous Pizza in North Adams has a new owner and a new vibe. https://theberkshireedge.com/business-monday-christos-famous-pizza-in-north-adams-has-a-new-owner-and-a-new-vibe/
South Pasadenan. South Pasadena Homes | Derek Vaughan. https://southpasadenan.com/south-pasadena-homes-derek-vaughan/
Yahoo Finance. Parker Ranch and Kamuela Hardwoods Announce New Company Focused on Sustainably Sourced Specialty Hardwoods. https://finance.yahoo.com/news/parker-ranch-kamuela-hardwoods-announce-001200888.html
EIN Presswire. Simpson Group Brings Unique Real Estate Expertise and Concierge-Level Service to Snoqualmie Valley. https://www.einnews.com/pr_news/556904373/simpson-group-brings-unique-real-estate-expertise-and-concierge-level-service-to-snoqualmie-valley
Info Entrepreneurs. Review your business performance.
https://www.infoentrepreneurs.org/en/guides/review-your-business-performance/
