At a glance
- Monitoring performance by carrying out a year-end business review can help you understand where you’ve been successful or where you might have missed opportunities.
- The objective of an annual business review isn’t just to reflect on the past year, but to set your path for the future, too.
- Use financial and other business performance data in your review, as well as input from key team members to help stay objective and relevant. Use any learnings to inform your goals for the year ahead.
Jake Munday discovered the importance of annual reviews soon after launching his firm Custom Neon in 2018. As CEO and co-founder of the online sign-making company, he realised these reviews were a key factor in pushing performance – and they have helped him accelerate annual growth to an electric 157% between 2020 and 2022.
“Early on we had to learn how important it was to monitor our performance closely to meet our yearly goals,” says Jake.
“To understand this performance, we use a combination of qualitative and quantitative measurements. It involves keeping tabs on financial metrics, such as revenue and profit margins, plus customer satisfaction ratings and brand recognition.”
Another critical lesson from these reviews was the importance of building agility. “Particularly since the pandemic, we’ve learned that our strategies need to be flexible and we must be ready to change as circumstances demand,” admits the entrepreneur.
“Regular strategy reviews ensure our approach always aligns with current context and can get past unforeseen challenges.”
Jake recommends other small or medium-sized business owners conduct reviews thoroughly, objectively and with an eye to development and flexibility.
To keep your plans strong and relevant, involve your team in the review process, appreciate their input, and be ready to modify as necessary, he says.
Integrating learnings from your review is also fundamental in progressing and elevating your strategy and planning your business year.
Preparing an annual business review
Where should you start in reviewing your strategy for 2024? First, step back from your daily routine and make time to conduct a comprehensive assessment of how your business performed in the last 12 months. Without interruptions, you can objectively analyse what went well and what you can do better next year.
For example, what were the highs, lows, surprises and disappointments? Did you exceed expectations in some areas – if so, why? Or in hindsight did you miss some opportunities?
Benchmarking tools could be useful here too, to help you see how your business performs against others in your industry or in your area.
Your year-end review checklist
The better your management information, the more insights your review can reveal, so gather as much data as you can.
Pull out your plan from a year ago. See how you’ve performed against the forecasts and goals you set, and what that means for the coming year. This should include all your key performance indicators, and an assessment of whether to add or remove any indicators as the business goals change next year.
If your plans changed in the last 12 months, look at how the deviations worked out compared to the original plan.
Schedule a meeting with key team members – perhaps outside your normal working environment. Gather their views on performance across all metrics, and where you can improve. Bring to this meeting a checklist of all the goals you set last year. The list should thoroughly evaluate factors relevant to your business, such as financial performance, customer acquisition and satisfaction, market trends, employee productivity, and operational efficiency in each area. Also consider whether your goals still cover all relevant aspects of your business.
Involve a wide range of people in the review. Tap into the expertise of senior management, non-executive directors, board advisers and employees. The more diverse the input, the better the chances of identifying areas where you can improve.
Set new, attainable goals, adjust financial projections, reallocate resources, and identify any technology or training opportunities you need to embrace. Be flexible and open to change throughout. Remember, a thorough end-of-year review isn’t just a reflection of the past – it’s your roadmap to your company’s future.
Which data to include in your review
For Custom Neon, key metrics to track in reviews currently include customer acquisition costs, customer lifetime value, conversion rates and net promoter scores.
“This provides us with information on our financial success and client satisfaction, which aligns with our emphasis on profitability and being customer-centric,” says Jake. He adds that, when forecasting, it’s important to balance ambition with practicality.
“At Custom Neon, we use a data-driven approach to forecasting, relying on internal data and market trends to inform projections,” explains Jake.
“This ensures goals are realistic while encouraging us to aim higher. However, we include some flexibility in forecasts so we can change them to reflect current market conditions and performance.”
Budgeting has also been crucial to help manage resources and ensure the team allocate funds in a way that supports strategic growth. “We match our budget and plan carefully, and we ensure every allocation has a specific goal. This involves identifying what the firm requires for steady growth, while also balancing short-term gains with long-term scalability.”
There’s clearly a lot to think about. So if you want your performance to burn as brightly as Custom Neon’s, think about starting your 2024 review now.
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SJP Approved 31/10/2023