When you complete the company incorporation process and get your business off the ground, you will have taken a big step towards becoming a successful business person. However, this is only the beginning of the process and in order to ensure the continued growth and health of your company, you will need to carefully monitor every part of your business.
An effective way to do this is to set up a system whereby you review all aspects of your business on a monthly basis. Such a system will ensure that you are likely to become aware of any potential problems in plenty of time to address them, before they become a serious threat to the health of your business.
This checklist outlines the most important factors that need to be closely examined on a monthly basis.
Financial Review.
The financial health of your business is imperative to its success, there are a number of aspects of the finances that you need to monitor closely.
1. Cashflow Projections.
In order for a business to succeed and grow, access to adequate cash resources (to pay bills, pay staff, replenish stock etc) is required. Without this a business will quickly run into trouble.
The completion of a monthly cashflow projection enables you to monitor the money that is coming into and going out of your business. If the income is more than the outgoings then your business is in a “positive cashflow” situation, if the opposite occurs, your business is in a “negative cashflow” situation and action needs to be taken.
2. Debtor and Creditor Analysis.
A monthly analysis of your creditors ensures that:
- You are paying your suppliers on time according to the terms of payment agreed with them thus maintaining your reputation and your credit line.
A monthly analysis of your debtors ensures that:
- You know how much money is owed to your business and by whom. You will know if any particular debtors are falling behind and need to be contacted. You will also see patterns emerging, e.g if one particular supplier is regularly behind in their payments, you may need to adjust the terms of your agreement with them.
3. Monthly Sales Figures.
Monthly monitoring of your sales figures, ensures that you will quickly know if sales are decreasing or increasing. This information will enable you to take appropriate action to try and resolve problems or to capitalise on successes.
Specific sales figures for each product will help you to see from month to month which products are selling well and which are not moving, allowing the necessary adjustments to be made.
4. Profit Margin.
Monthly calculation of profit margins is important, because if your profit margins are decreasing, then there is a problem somewhere, e.g costs may have increased. Some questions to ask here are:
- Are you suppliers charging you more or could you get better value elsewhere?
- Have your utiility bills increased, if so why? Have costs gone up or has usage increased?
- Are you charging enough for you product, look at what your competitors are charging.
Whatever, the issue turns out to be, if you check your profit margins monthly then you will be able to address problems in time.
5. Tax Returns VAT and PayRoll.
These are all necessary and legal expenses of your business and it is advisable to check each month that all is in order.
Comparison with previous years.
It is important to be able to check each month exactly how the business is doing in comparison to the same time last year. All businesses experience fluctuations in the level of business, there are busy times and quiet times and some businesses are more seasonal than others.
However, if your comparative figures show that your sales for a particular month have decreased significantly from the same month last year, there may be a problem. If you make a regular habit of doing a health check on your business, you will see these patterns as they emerge and take the necessary steps to fix them.
Stock Inventory Check.
A monthly review of your stock inventory will help to keep your business in a healthy position.
Many businesses use what is known as the Just In Time (JIT) inventory management system. The fundamental basis of this is that the business carries enough stock so that they will not run out. But not so much, that necessary cash is tied up in stock that is being kept in storage.
Doing a stock inventory check each month enables the business owner to align stock requirements with business projections, e.g if demand for a particular product is increasing month on month, then more of this stock will need to be ordered.
Similarly, if it becomes apparent that there is too much stock of a particular product, it may be necessary to do a special offer to shift this stock as well as ordering less of it in the future.
Stock inventory management is particularly important if you sell perishable items, you will need to know exactly how much you are selling as unsold stock will definitely go to waste.
Human Resources.
Your staff are a very important part of your business, so carry out checks each month to ensure all is in order.
Take note of absenteeism and sick leave so that you will quickly be able to see if there are any patterns emerging and you can deal with problems early on.
Maintain an awareness of annual leave entitlements, ensure that staff are taking their leave throughout the year so that it is not accumulating, and check that annual Leave is being staggered properly so that a number of staff will not be taking leave at the same time.
Take time during your monthly review to plan ahead for fluctuations in staff requirements, such as recruiting extra staff for busy times.
Market Engagement.
Keep your customers up to date with what is happening in your business by using online tools such as CRM (Customer Relationship Management) or MAS (Marketing Automation Systems). You can also send monthly newsletters, or personal emails. Use whatever means is most appropriate for your business and number of customers, but it is important to maintain regular contact.
Use the Google Analytics Tool, to assess each month the level of engagement with your companys website. Check how often your website is being viewed, where the traffic is coming from and whether views are converting into actual sales.
This information is very valuable as it will show you if you need to make changes to improve your online presence, you may need the assistance of a web developer in this.
Use social media to promote your business, social media channels require regular updates to keep customers engaged. Review your social media strategy to ensure it is working for you and that people are following your posts. If this is not the case, you will need to revise your strategy.
Set time aside each month to review any business leads you may have received ensure that you have followed them all up as much as possible, if there are any you neglected to follow up, do so now.
Data Protection.
Do regular reviews of data protection in your business to ensure it meets the highest possible standards, always be on the look out for security problems or breaches and address these immediately.
Developments in your Industry.
Keep yourself informed and updated about any new developments in your industry. Subscribe to newsletters, trade publications, etc that are respected. Set aside some time each month to read these and take notes on the ideas or developments that are useful for you.
This can be combined with also setting some thinking time aside for yourself to jot down ideas, observations and plans that you have so that your business can continue to grow and develop.
Business Plan – Milestones and Targets.
Each month, refer back to your business plan to check whether you are meeting the targets you have set and if your business is where you want it to be. If it is not in the position you planned, you may need to make adjustments.
Review your long-term and short-term goals and the steps you have set out to meet them, to ensure that you are staying on the right track to achieve your business goals.
Meet your Team.
Set aside time each month for a staff meeting, to review the past month, and agree plans and actions for the coming month. It is also good practice to meet your accountant and other advisers monthly so that everyone has all of the most up to date figures and knowledge in relation to the business.
Set a date for your next monthly review.
It is more likely that you will complete the necessary review each month if you plan ahead and schedule a date and time for this.
If you complete all the checks on this list each month, then you will have an in-depth knowledge and awareness of all aspects of your business. You are much more likely to quickly become aware of potential difficulties in any area. This will put you in a strong position to address these issues in a way that ensures the continued growth and success of your business.
