Smart businesses conduct regular business reviews, but – what is a business review and why is it an important business task? Denis Ahern of Do Business Smarter provides some guidance on how to conduct a business review for your business.
I came across a quotation attributed to Winston Churchill “However beautiful the strategy you should occasionally look at the results”.
It is not uncommon for business owners and executives to become attached to their ideas and business strategies. Whether ego is to blame or fear of change, repeatedly implementing poor business strategies will ultimately result in failure.
A business review to assess results
It is very important to conduct a business review and assess the results of your strategies, on a regular basis. This involves a thorough strategic review of the business, focusing on financial results, improvements in production yields and improvements in non-monetary measurables, such as absenteeism, etc. It is also important to review future plans and objectives. Changes must be made where poor performance has been identified.
Implementing a formal business review mechanism can be one of the most rewarding things that a business person can do. It puts control back in the hands of the business person.
Many business owners will accept what I have just written in theory, but never put a formal review mechanism in place. One of the main reasons for this is timing – it is never the right time!
Earlier in my career I was convinced that monthly business reviews were essential, with a thorough review of the monthly management accounts, an in-depth review of the KPI’s and a review of the years’ budgets/projections. I also advocated having an annual review of next year’s budget and projections. Experience has taught me that a monthly business review is not always the best option. I am now convinced that the optimal review period is Quarterly. This overcomes monthly fluctuations and provides a reasonable period worth reviewing, yet also permits a degree of thoroughness of evaluation that monthly reviews may not afford.
What should you cover in a business review?
A business review should encompass all areas of the business:
- Financial performance
- Sales activities
Most importantly though, an ‘eye to the future’ is required. Rolling projections for the next eighteen months should be reviewed, along with an in-depth analysis of the next Quarter’s budgets.
Who should attend a business review?
In organisations that are large enough, senior management and the board of directors should have various degrees of involvement. In smaller businesses, the business owner should consider involving an outside neutral advisor to attend and perhaps facilitate the process. This gives a formality and discipline to the process.
Whichever process is chosen, it is important for long-term success that a regular and effective mechanism is put in place. Discipline in implementation is the key to success here. If you choose a Quarterly review for your business, make sure it happens on a timely and regular basis and that it becomes a fundamental part of your management process.
Hint: When you have a systematised process like this in place, you will be able to manage your business without being there every day!
Image credit: www.thefrankboys.com
This post was written by Denis Ahern of Do Business Smarter www.dobusnesssmarter.com. Do Business Smarter has an office in the NSC Campus and one in the US. It teaches businesses to develop strategies and to conduct business reviews to achieve improved results. Services include coaching, consulting and training.
NSC Campus, Mahon, Cork | 021 2307041 | 086 8650995.