Your Business Needs an Annual Review

by | Strategy

Imagine it’s been a year since you launched your startup — or another year has flown by since you did.

Before opening your doors you had time to think about the big picture — which products and services to offer, the kind of company culture you want to develop, creative strategies for reaching customers and how to make the best use of limited resources. In other words, you had the luxury of time. Time to be proactive. To brainstorm. And to work through challenges and goals ahead of time.

This kind of “space to think” is vital to your startup’s long-term success even after you’ve launched.

You need perspective.

If you want to build a thriving business — one that’s powered by happy customers who keep coming back for more of what you sell — you need time to step back, take a breath and evaluate where you are now, where you want to be and whether you’re on the best path to get there.

Easier said than done, I know.

If you’re like most founders, once you opened your doors you sprang into firefighter mode, shifting from proactive to reactive. Every day your job consists of putting out fires wherever they spring up. The big picture falls by the wayside as you scramble to keep up with the very real demands of growing your business.

You need to set aside time for an annual review.

Annual reviews of your business need dedicated space where you can consciously shift your focus away from day-to-day details and concerns. Ideally you’ll set aside a healthy chunk of time for this — a whole day or a weekend where you disconnect from the world of daily operations and can spend some uninterrupted time with the fundamentals of your business. Space to truly think about things and not just solve immediate problems.

Less ideally, you can do this in smaller, dedicated chunks — like from 12pm-2pm for a few days in a row. It’s not quite as effective, but if it’s that or nothing, take what you can to carve out some specific time.

When you’re in that space, pull up your business plan or your list of goals from earlier in the year. (If you don’t have either, then this is the perfect time to make one.)

Next, it’s time to look at where your business has been this year and where you want it to go in the year to come.

Your annual review is a gut check on the direction of your business.

While you’re spending time with your business plan or list of goals, now’s the time to review how you wanted your business to go this year and compare it to what actually happened.

This is the place to ask the important questions — personally and professionally —that will guide everything you do and inform every decision for the next year.

You’ll want to ask yourself questions like:

  • Is my business working?
  • Is my business going in a direction that excites me or is inertia taking it in a different direction I don’t like?
  • Is my business growing into the thing I want it to be?
  • Am I doing the things I want to be doing?
  • Am I doing things the best way possible?
  • Am I happy with the results I’m getting?
  • Am I spending enough time on high-value activities?
  • Am I focusing on what my customers really want?
  • Am I reaching my revenue goals?
  • Are my customers happy when they engage with my business?
  • Do I have a good volume of both new and repeat customers?
  • Am I missing opportunities to improve and grow my business?

This is the place to get the kind of high-level perspective you had when you were planning your business (or making your yearly goals), so you can ensure you’re on the right track — or even the track you want to be on.

Ideally, you want to aim for the 80/20 sweet spot.

When it comes to what you’re spending your time, effort and money on, think about the 80/20 rule. If you’re spending 80% of your time/effort/money on 20% of your revenues, then things are out of whack. Ideally, you want to be spending 80% of your resources generating 80% of your revenues.

During your annual review, you can pinpoint the areas of your business where some rebalancing is needed. Maybe you’re spending a lot of time doing things you should be paying other people to do. Perhaps you hadn’t noticed that a particular product or service is really resonating with people — and focusing more resources in that direction will help. Or one of your offerings isn’t hitting the mark — and rethinking the concept or cutting the cord is what’s needed.

The annual review offers a golden opportunity to perform a gut check and look objectively at where your time and attention goes, and then plan course corrections for things that aren’t working out the way you want them to.

When you’re not getting distracted by the day-to-day stuff, you’ll be able to clearly see the trajectory your business is taking and get a much better picture of what’s working and what’s not. And you’ll actually have the brain-space to think through effective strategies for getting far more of what you want while freeing your business of any dead weight.

After your review, decide what you want to change.

Once you’re done with your review, you’re going to have a number of changes you’ll want to make in your business moving forward. As you plan out those changes, you’ll want to incorporate a bit of gut-checking as you implement them.

Edward Deming (of corporate kaizen fame) created the Deming Cycle, which is Plan –> Do –> Check –> Adjust. The idea is that once you make your plan and start putting it into action, you need to check it periodically to see if there are any actions you need to take to get things back on track or improve.

It’s a much narrower version of the annual review, geared towards looking at a piece of your business rather than the whole thing. This way you can make sure that after another year flies by, your review will show more of your business going in the direction you intend.

Make the annual review part of your yearly routine.

So do your annual review, put together a list of the changes you want to make, and as the year ends, plan out the steps of how you’re going to put them in place in simple ways. Ideally, this is an iterative process. You make a small change, see how that’s working out and adjust as needed.

Before you know it you’ll be doing more of what you want with your business and less time on what you don’t.

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