A mid-year business review is essential for any business that wishes to remain on track with its goals and avoid unnecessary risks. During your mid-year review, you’ll primarily be determining whether you are on track to meet your end-of-year goals, and how you compare with the prior years. Here are a few important steps to take.
- Assess the Quality of Your Own Leadership
Too often, business owners review their business operations, but they do not review their own leadership and performance. However, small and medium sized businesses rely upon the strength of their leadership. Employees take their cues from their superiors, and relationships with customers are won (and lost) based on the culture of the company.
Leadership isn’t just about being diligent and hard-working. The best workers and most successful entrepreneurs are not always the best leaders. Leaders must be able to inspire their employees, optimize their company’s inner workings, and identify and adjust to their own flaws. Are you the type of leader who might endure too much? Do you often create new projects rather than finishing old ones? Do you find it difficult to communicate with your own employees?
A self-review allows time for self-reflection and improvement. Cast a critical eye on any difficulties, challenges, or failed projects that you encountered throughout the year, and ask yourself whether you could have done more to avoid this, or if the difficulties could have involved you personally. With an SME, a business review is a personal review, too.
Employees’ feedback can be a valuable tool. However, do not ask your employees for direct feedback unless you’re prepared to take it in a constructive fashion. Instead, if you decide to pursue employees’ feedback, approach it from a positive angle: don’t ask “What did I do wrong?” ask “What do you think I could do better?”
- Dive Deep into the Numbers
Mid-year is when you should determine whether your current strategies are working, and that means taking a deep dive into your financials. Are you on target with your projections? If you aren’t, why?
Your income/expense statements, balance sheets, and general ledger reports are going to be incredibly important for your mid-year review. Explore:
- If your cash receipts/income match up to your projected income picture. If your income is going down, you need to figure out why quickly.
- If your expenses have exceeded the amount that you allocated for them. You may need to cut back, or your initial budget may not have been realistic.
- If your cash assets and liquidity are where they should be. If not, you may need to procure business loans before you run into problems.
- If your accounts are being collected. If you have a large amount in accounts/receivable, you may need to ramp up your collection’s actions.
- If your bills are being paid on time. Your relationships with your vendors can be damaged if your administration isn’t running smoothly.
Altogether, your financial statements are going to give you the best picture of whether your business is truly successful and profitable. While things can feel as though they are going well, they may not be going well as far as the raw numbers are concerned.
Of course, the numbers aren’t always everything, and there are some things you are unable to see in your financial reports. That leads us to the next step.
- Consult with Your Employees Regarding How They Feel
Consider a business that is doing well on paper, but sharply experiences a downturn at the end of the year. A business owner may seem perplexed: after all, their mid-year review looked great, as far as the financials went. However, if they spoke to their employees, they would have learned that their employees were burned out. They were working too hard, it was unsustainable, and it had to end.
A good mid-year review should also include employees’ feedback, regarding whether their workload is enough, whether there are business processes they believe could be improved, and whether they have any other suggestions. Obviously, not all employees’ feedback is going to be effective or actionable, but employees often know what’s going on at a ground floor level better than their superiors do.
If there are trends seen with your employees, it’s likely that it’s something that’s serious that needs to be resolved. If multiple employees complain about being overworked, about the company’s culture, or about feeling as though the company is moving in the wrong direction, that’s something important that the business owner should consider.
Even if employees are incorrect about some things, such as the company’s direction, the fact that they feel negatively is an issue itself that needs to be addressed. It’s possible the company hasn’t been as communicative or transparent as it should be, leading to this feeling.
Your business is comprised of multiple parts. Your own leadership, your financials, and your human resources are some of the most important aspects. By investigating these sectors of your business, you can identify issues before year end, and hopefully resolve them. You will also be able to identify patterns that could indicate problems in the future.
Being conscientious and mindful about your business, its financials, and its culture is half the battle. As long as you’re regularly reviewing your statements and listening to your employees, you should be able to remain on track. And if you find that your mid-year review provided negative information, it may be time to bring in an outside consultant.