It’s a feat for small and medium enterprises (SMEs) to stay in business one year from opening shop, much more expand and be profitable for multiple years. Many businesses close within a year for various reasons, like lack of funds, obsolete tools, or unskilled workers.
Businesses that survive may feel complacent or too busy to take on any additional task, like a mid-year business review. To ensure continued success, however, the practice of conducting a mid-year review is important. It lets business owners like you check if every aspect of the business is contributing to your annual goals.
A mid-year business review is an annual review, typically done by business managers every June, to check on the company's progress. It should analyze your past data and strategies, spot threats, design solutions and set more realistic goals. The six months from January to June is often enough to collect the data that you'll need for decision-making. After the mid-year business review, you also have the benefit of six more months in the year to test new plans.
Before everything else, download our free Mid-Year Business Review Template by clicking here. It's a summarized guide of the things you'll need, plus guide questions you and your employees will discuss for the actual business review session.
Emotions uncover the changes you want for the company, while giving you the energy to make those changes.
These can be financial reports, customer and employee feedback, employee opinions on the company strengths and weaknesses, and anything else that can measure your company progress.
Ensure your employees and key managers understand that a mid-year business review is not meant to achieve perfection – it’s meant to improve performance in small but constant ways. It is also a way to celebrate company wins, and learn from failures.
Finally, set aside a day in a quiet environment to perform the business review. You can do this by yourself, but it's best done with managers or key employees in different departments. This is so they can provide context on their team's situation and activities, preventing short-sighted decisions that can hurt operations and employee morale.
To stay in the right direction, make sure everyone understands and agrees on what your enterprise does. Specifically, you and your employees should answer:
Aside from ensuring everyone is aligned on the identity of the business, these questions will also uncover strengths, weaknesses, opportunities and threats. As everyone shares their insights, you’ll spot process gaps and day-to-day concerns that can be improved. You'll also see where you'll need training, hiring, or deeper evaluations of your marketing, products, and strategy.
Your levels of income from sales and expenses are obvious indicators of business profitability. There should be enough funds for overhead costs, like utilities, rent, salaries, Internet or delivery service.
Aim to generate and grow sales while keeping operating expenses low. To do this, monitor your cash flow – the funds that go in and out your business. Income from sales might be offset by expenses on wrong tools, salaries of inefficient staff, or payments to a business loan. If you find that you are regularly experiencing cash flow problems at certain times, or spending too much on unprofitable aspects of your business, this is the time to make changes.
Celebrating successes – big or small – often makes employees more creative and more engaged in their work, a study by Harvard University Professor Teresa Amabile shows. She says employees will perform better if they have gained a sense of progress and a positive perception from others at the end of a workday.
As you proceed with the business review, collect positive findings and share them with your employees to reinforce what they are doing right.
This is the time to decide whether it’s beneficial and doable to lower or raise your targets for the year.
For your updated goals, make sure they are SMART: Specific, Measurable, Achievable, Realistic, and Timely. This means assigning a realistic numerical figure or percentage for your goals. For example, you can increase your sales target by 10%, or respond to customer concerns within 24 hours.
Goals should also improve non-revenue aspects of the organization. For instance, you can improve customer service experience, develop a new product, plan digital marketing, or find new materials or manufacturing suppliers.
After determining your goals, it’s time to dictate which activities receive the most and least of the funds.
When strict lockdowns due to Covid-19 were enforced, your business may have turned into a fully-online store. You may have downsized operations, upgraded computer software, and tapped logistics companies for delivery.
However, now that Covid-19 alert levels are down, people are going out. Thus, you might consider reopening your physical spaces for the so-called "revenge eating and traveling." These may require funds for renovation and salaries of re-hired staff.
Don't forget to consider upcoming events that your business can take advantage of, such as the Christmas season. Events will need funds for marketing or hiring seasonal employees; planning in advance is important to avoid gaps in your cash flow.
When it comes to mid-year business reviews, the key is to be focused, flexible, and intentional. Learn from your company’s progress, evaluate your growth opportunities, and make plans that balance your company’s goals with your employee and customer needs.
During your mid-year business review, you may find that you need financing for business needs and expansion in the remaining half of the year. You may also see unexpected cash flow gaps more often than anticipated, leading to a need for cash on short notice.
In these situations, a business loan can be the answer to growth. In particular, a revolving credit line can give you flexible, ongoing access to funds that you can withdraw from any time and only pay upon use. Unlike a regular business loan, you only need to apply for a revolving credit line once. As soon as it’s activated, you can borrow up to your credit limit whenever you need it, then re-borrow as soon as you’ve repaid your first withdrawal plus interest on the amount borrowed.
First Circle is a multi-awarded lending company supporting SMEs since 2016. To apply for a Revolving Credit Line and other forms of business funding, you may contact us at support@firstcircle.com.
