Small business owners can significantly increase their potential for success by putting in systems that review past performances and learn from past mistakes. For a small business to succeed, it needs to identify its successes and failures, and then improve their current processes based on what they have learned. The best way to identify successes and failures is to create an end-of-the-year checklist that will review the company’s performance as a whole, and each team as individual entities.
Performance Versus Budget
A small business watches its spending closely, and any money spent that was not in the budget can be a problem. At the end of the year, the company needs to examine actual spending versus budget for the company as whole and then each performance team within the company. While it is important to understand how the company is performing against its budget, it is also important to identify teams that are performing above, below, or right on their budgets as well.
The loss of a single employee can often have a devastating effect on a small business. While reviewing the company’s performance at the end of the year, it is important to take a look at the company turnover rate and try to determine why certain employees left. If the turnover rate was improved from the previous year, then the company needs to try and figure out what it is doing to convince people to stay.
Employee turnover is financially and emotionally difficult for a small business, and customer turnover can be just as traumatic. When the year ends, the company needs to examine the fluctuation in its repeat customer base to see if it grew or shrunk, and then try to determine why it changed.
Small businesses do not hire as many people each year as large corporations do, but that does not mean that a small business should ignore developing better training methods. If you can make the initial training process shorter, then you can start getting production out of new employees faster. If you give your employees better resources through improved training, then they will be more inclined to stay with your company.
Reputation management is critically important to the future of your small business. A bad reputation online or offline can result in lost customers and a lack of quality employment candidates. For this end-of-the-year analysis, it is best to hire an professional in reputation management who can help you to analyze your company’s overall public relations effect.
How well do the teams within your company work together? Are the policies in place for inter-team interaction maximizing the company’s potential? Most people would not think of examining how effectively the teams within a small business work together, but without strong internal relationships a small business is not nearly as effective as it needs to be.
The best way to reduce the operational risks that come with a small business is to analyze current activity and use that analysis to make positive changes. You should hire risk management experts at the end of each year to help you review your company’s performance and recommend changes that will improve profitability.