Don't Skip Your Year End Assessment

It’s fine weather. It’s a beautiful summer day on a two-lane country road. The fragrances of summer and the sense of possibilities flow from every direction.

Okay, but be careful not to get lost. Absorption in all the positives is the best way to miss an important turn. Or, worse than that, go down a road that’s a dead end.

Even a mild case of euphoria can be dangerous to a business owner. No matter how well things are going, it’s always important to check directions periodically.

Year-end assessments allow a business owner to conclude that everything is as good as it seems or to realize that something requires a course correction. The rigor is important to the stability and growth of a business.

A year-end assessment also provides a business owner with information needed for everything from maintaining lines of credit to preparation for natural disasters. It’s not to be skipped.

After all, why have a business plan (or a road map) if it's going to be ignored? There'snothing like a solid reminder such as year's end to get it done.

The degree of formality of the assessment will likely vary with the age and size of a business, but even the most informal reviews should include some structure. Let’s get some suggestions on how to get it done.

"We conduct a formal year-end assessment," says Ken Hebert, vice president of marketing at BluBird Industries in Sheridan, WY. "This process includes reviewing our key performance indicators, analyzing financials; assessing product performance, marketing, and advertising metrics; and gathering customer and distributor feedback."

There’s no question about the purpose of the effort. “This evaluation is critical in understanding if—and how- we met our goals and where we need to improve for the upcoming year," explains Hebert.

Time must be invested, but it's time well spent. "We would absolutely recommend this practice to others," says Hebert. "A structured year-end assessment provides valuable insights that help shape future strategies and ensures that decisions are data-driven."

Data are the highway mile markers and road signs that make it apparent where adjustments must be made. The more precise the data are, the more helpful.

“The assessment is an opportunity to measure success, identify inefficiencies, and realign objectives,” says Hebert. “Very often, having the principals state their ideas, and debate the problems and solutions, creates a proactive environment and limits—to some degree—a reactive environment.”

There’s a good reason to aim for encouragement of a proactive environment. “It is common knowledge that a reactive climate is defensive while a proactive approach allows you to offensively ‘take’ market share and have success,” says Hebert.

For fledgling companies, a formal assessment may not be needed. But something beyond a gut feeling should be done to evaluate 12 months of business activity.

“The most essential question every business owner should be able to answer at the end of the year is ‘Have we moved closer to our long-term strategic goals?’” says Hebert.

“It’s crucial to not only assess short-term performance but to measure progress against the broader objectives that drive the overall vision of the company,” explains Hebert. “This ensures that each year brings you closer to your end goals, and adjustments can be made as needed.”

Making the adjustments requires a commitment as strong as undertaking the assessment. Doing so also requires excellent communication with members of a team.

The purpose of the assessment is to identify where attention is needed or changes must be made. And then, add the attention or make the changes.

“How do you ensure the findings from your year-end assessment are successfully implemented into your future strategies?” says Hebert. Get down to ground level.

Sometimes, says Hebert, “The person at the 30,000-foot level loses control because they do not ‘inspect what they expect.’” The lack of follow-through puts the person at a disadvantage, essentially “imprisoning them in a reactive position and defending their market share versus expanding it.”

Again, it’s the follow-through that makes the assessment useful. “It’s one thing to assess the business, but the true value comes from turning those insights into actionable strategies, laying them out properly, and evaluating whether they were executed,” says Hebert.

“Clearly defined processes are everything,” explains Hebert. “Only then are you shaping your success in the upcoming year.”

An owner sets the objectives for a business. They are part of the business plan and the business strategy as it develops. What should be measured? The owner decides, but there are some good places to start.

There’s nothing like working alongside a certified public account to ascertain that the numbers are as good as they look, for instance. New business owners especially forget to tally the true total of all expenses and as a result overestimate profit.

In the immediate term, a business owner may get by with a gauzy view of profit. But for accurate pricing of goods or services, development of employee compensation, and so on, a clear view must be had.

A full understanding of how a business moved from point A to point B in the course of a year informs every part of planning for the next 12 months. “It allows you to see and plan for cuts in areas that need it but also plan for new inventory, equipment, expansion, etc., depending on your business,” says Rucker.

The year-end assessment obviously serves the interests of the business owner, but the ultimate beneficiary is the customer. A business that's getting it right is giving customers what they require.

“While knowing your financial numbers, strategies, how your market reach is faring, etc. are all important, I think the most important aspect is the customer,” says Rucker. “Are the services and/or products you are offering solving your customers’ problems? If they are not, then you need to evaluate what you are offering and why.”

Early fall 2024 began as a difficult one for business owners and their

A BIA includes an assessment of factors such as physical damage to a building, damage to machinery, restricted access following a disaster, and utility outages. It ties directly to a year-end assessment because hard data about sales and income, as well as customer satisfaction, allows a business owner to gauge how great a potential impact may be.

Although customers may not want to defect after a disaster shutters a business for a time, they may have to do so to meet their needs. The question is, will they return when it opens? Highly satisfied customers will.

Employee self-assessment can be structured by having each employee set a few goals for the year—a certification, a training course, etc.—and then asking them to self-check at the end of the year. It’s a way to encourage professional growth without being prescriptive.

The assessments from employees can guide an owner in the development of programs that bolster skills and strengthen the company. And, of course, an owner should also commit to a corresponding self-assessment. It’s all good. CT