Through annual reviews, small business owners may reflect on their company’s achievements, assess and acknowledge their team members’ value, and plan for the road ahead. A good review may be able to help a small business take stock of its biggest assets and strategize around its liabilities. Keep reading to learn more about annual reviews for small businesses – and how you might be able to use them to fuel your company’s success.
A detailed annual review will help give insight into how and why your small business has succeeded. Your review process should typically include the following components to capture the full scope of your success.
It’s important to clearly define all the moving parts of your small business. Consider how your products or services might advance from concept to creation to marketing. Who are the key players in these advancements, and in which departments do they work? Outlining your business’ divisions can give you clarity as to how and when everything gets done.
After delineating these parts, consider each one’s purpose. Ask yourself: How would an employee from each of your business’ divisions describe their job on a resumé? Each part of your business should have its own unique responsibilities, and each part’s responsibilities should serve a larger shared goal.
Now that you understand which departments handle which tasks, it’s important to understand which team members play the biggest part. A thorough employee performance review can help since it details the specific skills that each team member brings to the table. Through these reviews, you can identify your highest-performing employees using holistic and relevant criteria.
After your reviews, you can give feedback to employees who might need further guidance. Evaluating and acting on your employees’ strengths and weaknesses can help you brainstorm your future strategy.
Part of your annual review is knowing what success means for your small business. Key performance indicators (KPIs) can help you see how close you are to your definition of success.
You should consider the ways in which certain metrics might differ among your company’s divisions. Creative divisions might require different analysis than financial ones, and your processes for measuring success should reflect this. Think about what a good work week would look like for each division and which processes and roles might contribute to making one happen.
Now that you’ve considered the qualitative differences among your company’s parts, you can shift to quantitative measures. Ask yourself: How did each division perform this year, in numbers? You can answer this question with each division’s profit and loss margins, which can hint at your company’s strong and weak divisions. From there, you can provide the right kinds of support for any divisions that need a boost.
While zooming into each division’s numbers can be revealing, it’s equally important to zoom out and look at your business’ big-picture performance. How do your numbers compare to last year’s, and how do they compare to the goals you set at the start of the year?
This is an opportunity to strategize about how to continue trending upward in the upcoming year. It’s also your chance to see what factors might have influenced any hiccups or downward trends in the past year.
Consider the most significant aspects of your annual review and how the various mechanisms in your business have each affected the year’s outcomes. A good review should end in detailed reflection and orient your team toward the year ahead.
Below are some steps to take in an annual review for your business.
Consider the ways that your business has worked toward its goals, both short- and long-term, over the past year. You should also look at how your team’s performance this year compares to previous years. This reflection should inform how you review your company’s achievements and challenges.
Before beginning the evaluation process, establish your team’s benchmark for success in each category. Consider which metrics are most important to your team and the growth and success of your small business.
You might examine customer engagement levels, visibility in different regions by different demographics, and location data if your company has an online presence. You can also look at feedback and reviews if your business serves clients or your repurchase rate if you run an ecommerce business.
To properly contextualize your year in review, you can think about how your company’s core values might have shifted or evolved in the past year. What was important to you when you founded your business, and how have you worked to bolster those ideals in the years since? Think about how the events of the past year might have motivated you to reframe, reinforce, or reconsider these fundamentals.
This stage should also include a thorough analysis of your company’s competitors. You should also review how you and your team have worked to differentiate your business from others like it. This exercise can reveal many of your company’s unique values.
In your annual review, consider both long-time and newly-established goals, while highlighting those that became particularly important to your business this year. Think about how you conceived these goals and the significance they carried over the past year. This will set you up to better discuss your team’s progress and current challenges.
After establishing which goals were most relevant to your business, think about the internal or external forces that might have gotten in the way. Ask yourself whether you anticipated each obstacle — a competitor, an environmental hurdle, or an internal challenge — when building your business plan. Consider which of these obstacles will still be relevant in the year ahead and which are behind you.
To evaluate your company’s financial growth, examine and compare your revenue from previous years. Look at whether you’ve been able to increase your cash flow or minimize costs. Based on this data, figure out what kind of sales forecasts you can make for the coming year.
During each of these stages of your annual review, think about the future of your business. How might these developments and achievements influence your team’s plans for next year? A good annual review can guide your next year of business and lay out the steps for achieving your long-term goals.
While conducting your annual review, you should ask yourself the following questions. Their answers can shed light on how you should operate over the next year.
A good business review doubles as a tool for mapping your team’s strategy for the year ahead. As you reflect on your annual review, look for common trends, points of emphasis, or recurring themes. Find what has led to their recurrence, and strategize accordingly.
When reading the financial portion of your review, you might realize your team needs to overcome economic changes or setbacks. When consulting customer reviews and feedback, you might be motivated to focus on better meeting your clients’ needs. As you examine your company’s fundamental values, you may be able to more clearly distinguish your view from your competitors.
You might also find through your employee reviews that your team needs more thorough training. Or maybe the issue is that your equipment is outdated and you need an infrastructure overhaul. It could even be that, for all your business growth, your cash flow still isn’t enough to cover all your expenses.
Whatever you find should be more than an observation. It should be your first step toward taking action. For example, if you need more equipment or your cash flow is lacking, you can decide to pursue small business loans in the upcoming year.
After conducting an annual review you might find that you need outside support in the next phases of growing your company. SmartBiz offers a wide range of financing options to help your business through the next phase. Check whether your business pre-qualifies for funding* to help you act on your annual review findings and achieve your long-term business goals.