December is here and with it the completion of the fiscal year and internal operations; by this point you have all the information to determine whether it was a good year, or if your strategies need to be adjusted. It doesn’t matter if you are a small or medium business, the end of the year is the perfect moment to assess your business performance.
Reaching goals, fulfilling forecasts, and staying on budget are important to determine the financial health of your business. But to guarantee its survival it’s necessary to have a clear business plan and to revisit it every once in a while.
Keep your mission on sight
Roughly 80% of new businesses survive past their first year of operation, however almost half of all businesses stop running after five years, and only one-third make it past their tenth anniversary. The most recurrent reason for these failures is the lack of profitability. A good idea doesn’t guarantee business success.
A business needs a solid structure: processes, roles, and performance analysis and unrelenting dedication in order to be successful.
Don’t forget your business plan
Your business plan must always guide your operations, it is what got you in business. Comparing your daily operations with what you theorized on paper will make you keep your goals in mind, and assess the efficiency of your business performance. There’s always room for improvement, so with everything you learned this year, you can edit and tweak your business plan to make it better, realer and more efficient.
Adaptability leads to achievement
Even if your business plan is a strong guide to maintain your goals, it shouldn’t be a source of restriction. If your financial analysis show that some business areas that you didn’t even plan are turning revenues, but your core business isn’t, you should follow the market.
Sometimes we stumble on abilities we didn’t know we have, and that applies for business too. If something unexpected develops and it’s turning profit, make it part of your business plan and help it grow.
Financing in your operations
Most business require investment of financing at different points of their operative lives, but the first years are usually the most challenging. Ideally effective business performance reflects on the ability of a business being capable of covering their daily operations. It’s important to know how much additional investment or external financing your business received on 2017, can you pay them back before the year actually ends? Is external financing necessary to cover your operative costs?
Grow with direction
We tend to see financial growth reflected on the amount of employees or the size of infrastructure, and though this might apply to some business it’s not a general rule.
Make sure your business is growing financially not only literally; on this yearend measure your business performance: analyze the cost and profitability of every asset you have, as well as all of your business areas, and your staff. Sometimes business are not growing financially, and the only thing that keeps getting larger are the operative costs.
This year end gives you the opportunity to be honest with yourself about how you are running your business, to evaluate your business finances and to determine what can be improved, what works and what does not. There’s nothing better than to close a cycle with the information needed to start a better one, remember: the planning and analysis of information can be the difference between your company having a long life or becoming part of the business failures statistics.