Running a business can be like attending school where students are periodically assessed to gain insight of their knowledge acquisition. So should entrepreneurs in the small and medium business industry make use of such assessment methods to evaluate their strategies, at least every mid-financial year.
Gerrie van Biljon, executive director of Business Partners Limited, a specialist risk finance company for formal small and medium enterprises (SMEs), says that businesses which do not allocate time mid-year to reflect and plan are running the risk of not operating at their full potential.
According to van Biljon the process of mid-year reviews also tends to unlock ideas, strategies and solutions not previously thought of.
“The benefits of such an exercise are hard to overstate as it helps the business owner to crystallise the business’ strategy for the rest of the year, clarify the challenges that lie ahead, celebrate and strengthen the successes of the past six months, and then prompt the necessary changes,” he says.
“Whatever the outcome, it is advisable to document the main points discussed or decisions taken during the review as a point of reference for later reviews”
Van Biljon adds that this kind of formal planning session is by no means reserved only for big corporations. “It is much quicker for a small business to adapt its strategies in reaction to a market challenge or an opportunity, and a mid-year planning session is an ideal method to ensure that the business makes use of that advantage.”
Different strokes for different folks
Depending on the complexity and size of the company, the time needed for a half-year review will differ, says van Biljon.
“This will depend on how good the business’ systems are, but if all the necessary information for such an exercise is up to date, reliable and available, then the business will save a significant amount of time,” he says.
“Should the half-year review lead to a new finance application, or the purchase of a new piece of equipment for example, a formal plan to present to the financier is a must. Whatever the outcome, it is advisable to document the main points discussed or decisions taken during the review as a point of reference for later reviews.”
Van Biljon says the overall purpose of a mid-year review is to ensure that the business owner is still in tune with their targets, their team, and the marketplace.
The following is Van Biljon’s 4-point guidance on what should be considered when conducting the mid-year review:
- Cash-flow forecast.
- All-encompassing approach: Reflect sales targets, re-motivation of staff members and business’ operations.
- Work on structure, such as an SWOT analysis, where the team considers the strengths, weaknesses, opportunities and threats facing the business.
- Adequate research: look not only at what’s happening in the business, but also in the marketplace