Are you running your business like an easy sprint or a tiring marathon?
With limited resources and so much to do, it is not uncommon for teams to lose sight of their original goals when they first initiated the project. Nothing is more demoralising than reaching the end of a quarter or year with no clue or consensus on whether your results indicate a success or a failure.
Every small business has many moving parts and as a business owner it can be a challenge to stay on top of all your tasks while keeping the bigger picture in mind. By tracking your organisation’s monthly progress diligently, you will be able to accelerate what’s working, cease what’s not working, and act quickly if there are any blockers impeding your month-on-month growth.
What should you be tracking? We’ve compiled the following list to help you get started:
1. End of month accounting reporting
Managing your business finances is definitely at the top of every business owner’s mind. This time of the month does not have to be panic-inducing if you have in place a fixed procedure to record your transactions correctly and review your results regularly.
On a monthly basis, you should be doing the following:
- Balance your checkbook: Make sure your cash transaction entries are accurate and that you’re working with the correct cash position;
- Review past-due receivables: At the beginning of the month, send out friendly reminders to customers, clients and anyone else who owes you money;
- Analyse inventory status: Reorder products that sell quickly and identify others that are moving slowly and may need to be marked down or removed;
- Process payroll: WIthhold, report and deposit the applicable taxes to the appropriate agencies by their due dates;
- Review actual profit and loss vs budget: If you don’t have a budget prepared, compare your current profit and loss with the same prior-period year-to-date statements;
- Review month-end balance sheet vs prior period: Compare current balance sheet with one from the same period in the previous year to see how you’re managing your assets and liabilities.
Settling all outstanding debt, taxes, and bills on time will earn you trust from your employees, investors and creditors, and contribute to long-term goodwill. If you are the one struggling to balance your books because of clients who don’t pay up on time, check out our post on the 5 must-have legal documents for cash flow optimisation.
2. Take stock of your company’s growth by tracking key metrics
How did you do this month? How did that fare against last month’s results? Which marketing channels worked and what types of leads were most likely to convert? What are the products that did best?
Apart from the requisite monthly accounting reporting to ensure that you’re meeting your bottom line, you should also review your company’s performance on certain key metrics to ensure that you are progressing towards your goals. These are some of the metrics that small businesses commonly monitor in order to track their progress:
- Sales revenue
- Customer loyalty and retention
- Cost of customer acquisition
- Operating productivity
- Size of gross margin
- Monthly profit or loss
- Overhead costs
- Variable cost percentage
- Inventory size
- Hours worked per process
Regular review of your input and results helps you to optimise resource allocation and gives you maximum return on investment. In the long run, tracking relevant KPIs will empower you to make important decisions about your company’s growth.
3. Assess where you stand in your industry
What new technologies have been introduced in your industry? What have your competitors done in the last month to improve their products, and what can you learn from them? Is there a gap in the market your competitors are not filling that you can take advantage of?
Given the fast-based business environment, you need to constantly be updated on industry news and where your business stands in order to take timely action. Waiting too long can often be detrimental to your efforts and goals. Staying updated on the latest trends will allow you to respond to your customers’ needs and help you build a sustainable business in the long run.
To make this as convenient as possible, simply subscribe to reliable industry newsletters and follow your industry’s leading thinkers on LinkedIn to diversify your source of information. One way is to sign up for Google Alerts and set an alert so that news for search terms relevant to your industry is delivered straight into your inbox. Once a month, set aside a few hours to consolidate the information you have come across and evaluate how this affects your company.
4. Check in with your employees
Apart from looking outward to see where your company stands in the industry, it is important to look inward to ensure your employees are aligned with the overall vision for the company. While you might have a grand plan for how to bring your business to the next level, it is important to ensure that everyone in your company is on the same page so that any strategy that is formulated can be successfully executed. According to a study published on the Harvard Business Review, one of the biggest reasons for the strategy-execution gap is the lack of employee interaction.
Instead of seeing strategy formulation and execution as two distinct phases, leaders should aim for participative execution. What this means is that as a business owner you should move away from one-way, directive communication from your end and instead engage your employees as stakeholders who contribute to shaping the way forward. This will help your employees feel invested in both your long-term and short-term goals and ensure they are committed to the success of the business.
5. Consult your business mentors
As a small business owner, the health of your business is dependent on your own well-being. If you feel like you’ve hit a roadblock, talking to a mentor can help provide a fresh perspective on the issue and bring clarity to your decision-making process. Consulting someone who has had more experience in the business world will make you feel less alone in your journey as an entrepreneur.
Of course, it’s important to ensure that any mentoring arrangement is a two-way relationship. Apart from seeking out your mentor in times of crisis, you should also set aside time to meet with your mentors on a regular basis to thank them for their mentorship.
What do you have on your monthly checklist?
Share with us in the comments below!