It’s easy to go through a whole year in business without really assessing your progress, especially if you’re a solo entrepreneur or have a very small team. We can’t all afford the luxury of hiring individuals for the sole purpose of measuring business performance and telling us how we’re doing – well not yet anyway! Read on to learn simple steps to help you conduct an end of year review.
As I’m reminded of the fad of creating New Year’s Resolution that are usually forgotten by Spring (if that), I’ve discovered that before looking ahead it’s important to look back – especially when you’re running a startup or small business.
Every startup founder and small business owner ought to get into the habit of critically assessing their year in business. Here are three reasons why conducting an end of year review is essential.
You can identify the problem areas.
Some problems are less easy to spot than others. You might notice your customers complain about a certain product whenever they buy leaving you in a spin as you scramble to find a solution to their problem.
This doesn’t always mean however that the problem is with your product. In actual fact the issue could be in the marketing of your product. For instance, if you haven’t quite nailed your messaging and customers think they are getting something else, they are more likely to complain when they receive something that doesn’t match up with their expectations. This is just one example to illustrate why it’s important to take a fine tooth comb through your business operations at the end of the year.
You become proactive instead of reactive.
When you take the time to analyse your business performance without the pressure of responding to situations as and when they arise, you become less reactive. It gives you the opportunity to position yourself as a proactive entrepreneur who has a lid on their business and can respond instead of react as you move forwards. Armed with more awareness and facts, you can focus more on working “on” instead of “in” your business.
This is a phrase that’s thrown around a lot I know, but essentially what I mean is that rather than become a slave to your venture, you become a pioneer steering it in the direction of growth. This allows you to plan ahead and prepare for different scenarios in business along with contingencies to ensure you keep it moving!
You can set more defined goals.
When you’re just establishing a startup, there’s a lot of guesswork involved. While this is a usual and generally accepted practice, there’s only so far educated guesses will take you. Ever had hugely optimistic goals about your sales income before you start only to struggle to sign your first client even (don’t worry we’ve all been there).
When you are armed with clear information showing what your business generates and how it performs, you can set more defined goals to build on what is already taking place. For example, you might want to grow your profits by 20% in 2018. Or you might want to attract more traffic to your website. The point here is that, it becomes easier to set goals that are more achievable when you have a clearer idea of your starting point.
So now we’ve covered why you should take a look back over your year in business, let’s look at some of the things you can assess and measure.
- Sales income: if you haven’t already, measure your average sales not just monthly but also on a quarterly basis. Measure the costs of doing business, your expenses, overall gross and net profit. These are easy numbers that you can calculate without the need for an accountant if you don’t have one yet.
- Number of repeat customers: don’t fall into the common trap of only treating your new customers like royalty. Repeat customers are invaluable and will bring the costs of doing business with them down. Take a look at how many customers you were able to up-sell or resell to. Is this an area of potential increase you have been neglecting?
- Marketing spend: how much did you spend on the all-important activity of marketing your business? What kind of results did this produce and what was the return-on-investment? Maybe you haven’t really allocated any finance to paid marketing at all, which begs the question of how much growth you can really expect.
- Conversion rates: how many visitors who landed on your website ended up on your email list? How about that new product or service your launched, how many prospects did it convert into sales? What are your average email open rates? What are your click-through rates?
- Customer feedback: getting feedback from your customers and clients is invaluable. It will help you to improve your offering and tailor your business to meet the genuine needs and requirements of your target market.
- Content development: ever heard the phrase “content is king.” Well I hate to break it to you but regardless of the type of business you have, the fact is that we are now in the knowledge economy so good content is an important part of the buying process in reaching more customers.
- Successful and failed projects: don’t just take note of the projects that were executed well or delivered the results your desired. Compare them with projects or business campaigns that failed, why did one work when the other didn’t? The answers you get from these will produce key learning points for moving into 2018.
- Personal development: learning at every level is healthy for the entrepreneur who wants to constantly improve themselves. The version of you last year may not have been beneficial for your business this year, the version of you this year may not be the best candidate to lead your business next year and so on and so forth. That’s why you need to be intentional about investing in your development as an entrepreneur. Take a course (or two), join a local networking group, set time every week to better your skills using online tools, get a business mentor or coach. Reflect on how you’ve actively challenged yourself to grow in 2017. If this isn’t something you’ve dedicated any time or resources to before, now is as a good a time as any (you don’t have to wait for 1st of Jan).
Take a couple of days, or a few hours over the course of a week and take stock of the year your business has had.
Regardless of how you feel, use what you discover as a spring-pad for a more progressive, meaningful and successful 2018!
Got any top tips from your own business for conducting an end of year review? Comment below and share 🙂