When running a business, it is easy to get so busy dealing with the day-to-day issues that you don’t have time to stop and evaluate the overall health of your company. If your business is having problems and you don’t know why, a comprehensive review can help you pinpoint the problem. If everything seems to be running smoothly, scheduling an annual review of your entire business at the same time each year can help you catch any issues that would otherwise fall through the cracks. Think of it as preventative maintenance.
A checkup should look at all major areas of your company. Start by looking at the following areas and identifying any strengths, weaknesses or opportunities.
Finances
• Have your accountant do a detailed review of your financial statements, including accounting records, income tax, employee withholding, and credit card and loan statements.
• Do a cash flow analysis of your business. This is simply a list of the flows of cash into and out of your business that looks at the timing of each flow to determine if and when you might have a shortfall.
• Create aging reports on your accounts receivables. Identify which customers habitually make late payments and contact them to resolve any problems.
• Review your expenses. Look for unnecessary expenditures and ones that can be reduced.
Customers
• Look at what percentage of your business is repeat customers. If it is a low number, determine why customers are not returning.
• Ask your customers for honest and candid feedback about your products, services and how you could better meet their needs.
Sales and Marketing
• Compare last year’s sales numbers to the previous year’s and this year’s current numbers to both to determine if they are growing, shrinking or maintaining.
• Review all of your marketing efforts. Are you staying within your budget? Is each marketing effort producing results? If not, what new channels or other options have you considered?
Production Line
• Conduct a complete review of all your machinery. Are you having issues with any machines? Is your current production line able to keep up with demand? Take note of any machines that might need to be replaced, upgraded or undergo major repairs in the next year.
• Evaluate your production processes for efficiencies. Are there bottlenecks anywhere on the line? Could the plant floor be rearranged to create a smoother work flow?
Vendors
• Look at the performance of each supplier. Have they been meeting or exceeding your expectations? Are they reliable? Do they make deliveries on time? Do they provide value-added services that are beneficial to you?
• Evaluate current prices from your vendors. Have recent increases been reasonable considering market conditions? What have they done to your profit margin? When was the last time you did any price negotiations?
• Review and update your backup supply plan. If any of your regular vendors have any sort of supply issues, a backup sourcing plan can prevent a lot of trouble on your part.
Employees
• Calculate your employee turnover rate. Anything over roughly 15% warrants looking into the causes and may mean that management needs to make some changes to increase employee satisfaction or screen new hires.
• Review your employee files to ensure that they are in compliance with all state and federal laws and are up-to-date with essential information. This includes employment eligibility forms (I-9s), IRS forms (W-4s), emergency contacts, employment contracts and performance evaluations.
