Get A Jump On Your Competition With An Annual Review In Q4!

It is often said that the definition of insanity is to do the same thing over and over, again, and expect different results.  All too often, small business owners are hoping that business will improve, but they fail to take the most elementary step to make it happen—conducting a comprehensive review of their annual performance.

A Must For Success!

Annual reviews are viewed as a ‘must’ for success. All major corporations, today, arrange for the annual review as part of their normal business operating procedures. Annual reviews are considered to be a ‘best practice’ among industry leaders.  Additionally, Wall Street brokerage firms also have investment advisory services, which carry out their own independent review of the financial performance for publicly traded companies (in order to provide the best advice to their clients, concerning the future performance of these companies).

Even outside of the world of business, annual reviews are commonplace.  Every professional sports team runs an annual review of player and team performance that becomes the springboard for improving the team the next season. This annual performance review for the NFL teams has resulted, on average, in nine out of thirty-two coaches fired for failing to meet ownership expectations.

The question, facing every business owner in the fourth quarter, is how are they going to improve their business and their profits for next year?  The most probable path for success in business is to model yourself after the best managed and the most profitable companies in your industry.

Understand What is a Thorough Annual Review

It’s also not enough to just do a cursory review.  It must be a thorough review, which measures performance against a standard, both industry standards and the past performance of your business. In addition, no thorough review is complete without including a review of an owner’s tax situation, exit, estate planning and wealth building strategies meant to meet both short and long-term goals.

Are you running your business as if you were going to try to sell it tomorrow?  Are you building a business that is worth buying?  If you died tomorrow, could your business run without you, so that your family would receive the benefit of all your hard work?  Or would they have to sell the business below market value to raise the funds needed to pay the estate taxes?

In most situations, owners fail to conduct a comprehensive review of their business (including financial and operational performance as well as the previously mentioned tax, exit, estate planning and wealth-building strategies) and have not adequately planned for the future.  An objective analysis is often needed to be facilitated by someone with the skill to identify problems within a business and then make informed recommendations for fixing them.

The Early Bird…

One of the other advantages of doing the annual review, now, rather than after the calendar year ends, is that a business owner can get a jump on all of his competitors (who will wait until the year end for their performance reviews).  If a business owner holds off until January, it would then seem sensible to wait for year-end financials.  Your accountant, however, won’t have them available until the end of January, meaning that it will already be February before the analysis happens.

By the time that your recommended changes are implemented, results won’t be seen until March.  You would have lost the first three months of the New Year. The alternative is to do it, now, and hit the ground running in January for a full year of improved performance.  Here is the choice that the business owner must face:  get a jump on the competition or let the competition get a jump on you!

There is No Good Reason to Wait

If the best managed and most profitable companies perform an annual review, it just makes common sense that every business should have one, regardless of size.  By making yourself accountable to this well-recognized standard for business excellence, you’ll be to direct your business onto a path of performance improvement, while still in the current year, allowing you to leave your competition, in the dust, come January!