Small Business Checkup: Review the health of your business

Early detection and prevention are the keys to long-term health. It’s true of your body, your vehicle, your home, and your small business. Finding the time can be difficult, especially if you’re not sure where to begin. This is why we created this guide for small business owners who want to stay on top of their business’s health and growth.

Note that it’s not comprehensive—you may want to track metrics that are specific to your industry or region. We’re also not including the monthly tasks that many business owners already do, or know they probably should be doing.

Monthly tasks are more about working in your business. The following checkups are an opportunity to step back and focus on longer-term processes and goals for your business. You can use these ideas as a starting point and add them to your calendar or include them in pre-meeting notes with advisors and employees so you won’t forget later.

Quarterly small business reviews

A quarterly business review (QBR) can be a good opportunity to look over your business’s financial health and identify opportunities for improvement. You can start by checking:

• Financial statements. Your business’s income statement, balance sheet, and cash flow statement. These can give you a good sense of where you’re at financially, and digging into your revenue, expenses, margins, and cash flow can help you spot emerging trends.
• Progress on goals. A QBR can also be a good time to review your key performance indicators (KPIs) related to growth or other long-term goals. If you’re not keeping pace with your projection, consider what changes you need to make to turn things around in the coming quarter.
• Past-due receivables. Unpaid bills can eat into your cash flow and, if left unaddressed, lead to losses. Review your current past-due receivables and take action as needed. Depending on the client, amount, and how late they are, that might range from a quick reminder or late payment fee notice to sending an account to collections.
• Estimated tax payments. Make sure you make your estimated state and federal tax payments quarterly, at a minimum, to avoid penalties and interest.
• Employee check-ins. Schedule meetings with a few people in high-performing and low-performing parts of the business to learn more about their experiences. Ask about their ideas for improvement and what you could do to better support their success or remove blocks that are hindering their productivity.

A quarterly review can also be a good time to go over the wins and setbacks from the previous three months. You might want to do this on your own or as part of a team exercise.

Mid-year small business reviews

The biannual business review adds a few additional items to your quarterly check-in. These aren’t any less important, but they tend to require less frequent monitoring and changes.

• Recurring expenses. Review your recurring expenses for software, utilities, insurance, merchant services, and any other systems or services that you use. Set aside time to collect quotes from different vendors and call your current providers to ask for a discount. Also, look for other ways to cut ongoing expenses, such as investing in energy-efficient upgrades.

• Personal and business credit. Your personal credit and your business’s credit can affect your ability to qualify for small business financing. Monitor your credit scores to see where you’re at — you may want to track these more frequently if you’re actively trying to improve your credit.
• Ask for more favorable terms. If you have an ongoing relationship with clients and vendors, you may want to ask for more favorable payment terms to improve your cash flow.
• Fraud and scam reviews. Criminals frequently target small businesses with cyberattacks, scams, and fraud. Try to conduct (at least) biannual reviews of the current scams and review them with your staff. You can also review your credit report for unusual accounts or activity that could indicate identity theft and fraud.
• Your personal goals. Many small business owners can’t separate their personal and business lives. Consider how your business is helping or hindering your personal goals and how you can align your business and personal success.

Annual checkups for small businesses

Annual checkups are a time for deeper analysis and strategic planning. You might want to set aside a few days to an entire week for your annual review depending on how complex your business is and how many people will be involved.

• Review and revise goals. Look over your KPIs again. But rather than solely tracking progress and efficiency, ask yourself if you should be revising your KPIs altogether to better reflect your current priorities and goals.
• Evaluate your products or services. Closely analyze your sales to see which products and services are resonating with your customers. Try to identify opportunities for growth and where you should be cutting back. Using an existing framework, such as a SWOT (strengths, weaknesses, opportunities, and threats) analysis, can give you structure for these types of strategic planning.
• Professional check-ins. Hire and meet with outside experts, such as an accountant to review your books or an IT professional to check your cybersecurity systems. An attorney can also advise you about new rules and regulations. For example, starting January 1, 2024, many small business owners will need to register with FinCEN or face potential civil and criminal penalties.

Based on your analysis, you may also want to prepare projections for the coming year. These can help you understand whether you need to hire more people, invest in new technology, or buckle down to get through a slow period.

Regular checkups can help keep you prepared

Having a structure and routine for your business checkups can help you steadily track progress over time. And you rely on the insights from your quarterly, mid-year, and annual checkups when you have to make important decisions throughout the year.