Annual Business Evaluations

The end of the fiscal year is a primary time for organizational evaluation. Whether you have a start-up operation and have been in business less than a year, or are a veteran; annual evaluations are not only beneficial to all organizations, they are a necessity.

During an annual evaluation, you want to assess your entire operation. First, start by examining your annual revenue against your cost of doing business. Were your profits as high as you had expected or hoped they would be? If not, why didn’t you make as much as you wanted to? Was it due to a lack of or faulty marketing efforts? Did you lose customers or clients? Did you spend too much time and money training employees with a high turn-over rate? If profits were higher than expected, first take a moment to celebrate your good fortune; then get back to business. Why were profits so high? Did you gain an unexpected amount of customers or clients? Did you efficiently train employees, and therefore had a low turn-over rate? Did you increase free publicity through effective public relations efforts?

After examining your revenue, move onto your organizational structure. If you planned well from the beginning, your structure should be fairly flexible to meet the current needs of your business, while having room to grow as your business matures. Do you have enough employees to meet current demand? Do you have too many employees? Are the current positions meeting organizational needs? For instance, a company may have a Human Resource Director and a Human Resource Assistant. As the company expands and begins to receive more business, it may be necessary to incorporate a Project Coordinator. Rather than hiring someone new, the Human Resource Assistant can probably make a very good Project Coordinator (during the annual review the company discovered that the Human Resource Assistant did not have a lot of work to do). Moving employees rather than hiring new ones can help your organization save time and money. Sometimes a change in title and scope of duties for one employee is all an organization needs to do to substantially increase productivity for the entire operation. This is also a great time to conduct individual employee evaluations.

At the end of the day, most businesses have the end-goal of growth. What did you company do in the last year to expand? How are you staying in touch with new and loyal customers and clients? How are you reaching people who may have never heard about your business? What is your current publicity/marketing strategy? How much time are you spending executing it? Based on your answers, should you consider outsourcing?

While product quality and assurance should be an on-going process, a year-end evaluation should also include an assessment of your company’s products and services. How do your products and services match up to the competitions’?
It is important to take note that whether the news is good or bad, you must always search for the reason why in your annual evaluation. If your company performed poorly, you will need to understand what went wrong so you can fix the problem. If your company had a stellar year, you will also want to have a thorough understanding of why so you can repeat and improve on those results for the next fiscal year. Once you discover what your company did right, and what went wrong, take the time to make a new plan for the upcoming fiscal year. This is a great time to bring out your business plan as well and make any necessary revisions.