2020 brought some unprecedented times. Patterns and norms were broken in countless fits and starts, and companies had to adjust. Now as we quickly round the bend toward 2021, we can easily forget to look back in our eagerness to rush ahead. For so many reasons, and to the extent that it's possible, we recommend for business owners to dedicate some time, slow down, and conduct a thorough year-end review.
Look Back to Look Forward
It's just as important to look back as it is to gaze ahead. After all, every business and it's owner exist on a continuum - where you were, where you are, and where you're going.
An effective year-end review process takes all that into account and need not be laborious or time consuming. In fact, it can simultaneously be quick, simple, and highly effective. The process can be conducted by the owner and perhaps a few key team members, the business's board of directors, or advisors. Bring in people who know the company and can contribute valuable input to the process.
Down to Data
Once you have tallied up your year end numbers, it is easy enough to compare them to both the prior year's numbers and what was forecast in your plan for this year. Beyond the cold data, it's also worth evaluating obvious operational issues that might go unnoticed in the day-to-day hustle.
So step back and take an objective view. It's not easy to separate yourself emotionally from the business's failings or successes, but that's the only way to get a clear picture. Ask yourself some general questions to get started:
- How did the business perform overall?
- Where did the business outperform expectations and/or the prior year?
- Where did the business fall short of expectations and/or the prior year?
Answering these questions will yield some important data sets. Be laser-focused on the resulting numbers, and especially on variances and deviations. If you come across a discrepancy of 10% or more, make special note to spend the needed time to understand the reasons behind the shift. Other metrics can also be valuable assessment tools, including an array of customer interactions.
A strict focus on the actual numbers is a key way that a business owner and their management team or board can begin to understand the state of the business. But to truly know how the business is doing - and why - more pointed questions need to be asked. It's time to drill down:
- What did the business achieve?
- How did achievements impact growth?
- What setbacks were experienced?
- What lessons were learned?
- What were the biggest disappointments?
- Which strategies aided growth?
- Which strategies were inefficient?
- What was the biggest accomplishment?
- Were goals reasonable and achievable?
We would also suggest adding two key words to the end of every question you ask: "And why?" Knowing the facts is vital, but knowing why things happen can help your company to process the data and move forward with purpose. This is an opportunity to get rid of systems or processes that are hindering success.
In our experience, privately-held businesses that make time for a concentrated focus on business planning, performance assessments, and analysis are the companies that endure. They are able to survive tough times and will ultimately both outperform and thrive.
Embrace The Positive
It's easy to avoid looking back so as to avoid reliving mistakes or challenges. But a look back shouldn't only yield constructive criticism. Instead, look for the small victories. Find goals that were reached and celebrate the people, processes, and strategies that helped you get there. Pinpointing what went well can help your team to cultivate and refine key practices and incorporate them into next year's planning.
Now that you know you can meet goals even during an otherwise devastating pandemic, give yourself and your team a well-earned pat on the back. Starting a review with a generally positive vibe can only help to project you forward with confidence and eagerness to grow. Keep both short-term and long-term goals in sight, and focus on building and maintaining momentum.
Experienced and Realistic Advice
At Calkins Law Firm we know that successfully operating a business is no small feat. We've also found that a yearly, focused review is key to ongoing growth. But along with plenty of dedication and know-how, you'll also need reliable advisors. Our team has solid business and legal experience and can testify to the importance of analysis and taking a thoughtful approach. As your business grows you'll likely be in need of solid legal advice and a practical eye - feel free to reach out. We are honored to assist you in reaching even greater business goals!