Conducting Your Annual Business Review
Annual reviews are not just for employees. All small business owners should do a yearly review of their business practices to see what worked, what didn’t, and what they may have missed. Last year, admittedly, was not a normal year for businesses, large and small. But still, there were lessons to be learned.
Here are three business best practices you can implement this year that can help you grow your small business.
1. Offering Customer Solutions
Notice we didn’t call this section “Marketing”? There’s a good reason for that. In the tumultuous year of 2020, consumers turned to their favorite businesses for the comfort of the familiar and the sense of stability. They assumed these companies would understand their needs and be there for them, providing solutions, not targeting them with overblown sales pitches.
For the past several years, customer experience became the new business buzzword. Businesses tried to outdo one another in their experiential approaches. And then everything changed.
What was important—and what worked in 2019 was no longer applicable in 2020. And businesses will likely need to adapt again in 2021. Small businesses need to be flexible. Paying attention to consumers’ needs and preparing to pivot to meet them will be rewarded with positive buzz and customer loyalty.
Best Practice: Humanize Your Company
When your business shows empathy, it reveals the personal, human side of your company. A recent survey by Genesys, Personalization & Empathy in Customer Experience, revealed somewhat alarming news. Nearly half of the consumers surveyed said the companies they did business with didn’t show enough empathy when delivering customer service. Underscoring that, an Iterable survey showed 83% of the consumers polled said they were more likely to buy from businesses that inspire an emotional bond. Younger consumers, Gen Zers in particular, expect empathy from the companies they support.
The reality is empathy is a competitive necessity. Consumers have many choices and ultimately do business with people they know, like, and trust. So, it’s key to let them know you care more about solving their challenges than about profits.
2. Making Employees Happy
Similarly, if you asked your employees a year ago what was important to them, the answers would be very different than if you asked them now. While flexibility and higher wages topped employee wish lists in the past, this year, the importance of employee benefits has risen in the ranks. According to insurance group The Hartford, the pandemic has put pressure on the American workforce in ways few could have predicted. Employees need more support than ever. If you want to retain your current workforce, you need to address their concerns about the benefits your business offers them.
Best Practice: Ask and Deliver
New research from The Hartford shows employers are currently offering the following benefits and services to reflect employees’ wants:
- Employee Assistance Programs (EAP) (56%)
- Paid Time Off (52%)
- Wellness Benefits (51%)
- Behavioral/Mental Health Services (51%)
- Critical Illness Insurance (50%)
- Hospital Indemnity Insurance (48%)
- Paid Time Off for Volunteering (42%)
- Student Loan Repayment Plans (38%)
- Paid Sabbatical (38%)
- Pet Insurance (29%)
Of course, some of the benefits employees want vary depending on their age and stage of life. If you’re unsure of their needs, ask them. As you review the employee benefits, you currently offer, keep in mind that physical, mental, and financial wellness are top of mind for employees these days, so try to address those needs as well.
3. Is It Time to Change Your Legal Structure?
Chances are you haven’t thought about the legal structure of your business since you first selected it. But that can be a costly mistake—and one that’s easily avoided by reviewing your status with your accountant and/or attorney. Last year many small business owners faced challenges they could have avoided if they’d had a different legal structure. Access to relief funding, increased tax breaks, and liability protections are all reasons you should consider a structure conversion.
Best Practice: Research and Weigh Your Options
The most common form of business ownership and the easiest to start, a sole proprietorship, may seem a little too risky to maintain these days since there is no legal separation between the owner and the business. If your company cannot pay its debts or is ever served with a lawsuit, your personal assets are at risk, including your bank accounts, any property you own, and your retirement savings. It’s safer to select incorporating as either a C Corp or a Limited Liability Company (LLC), both of which are considered separate legal entities, where all activities (debts, etc.) of the business belong only to the business.
Alternately, you may have formed as a C Corp and found the compliance issues too restricting. You may want to change to an LLC which have fewer filing deadlines and better tax options. Not all states allow structure conversions, and it may be necessary to dissolve your business and form a new company with a different structure. Another option is to elect S Corp status, which allows a corporation or LLC to be taxed as a pass-through entity. You have until March 15 to file Form 2553 with the IRS to become an S Corp.
Don’t Be Afraid of Change
Smart business owners are always open to change. Conducting an annual review and applying best practice management to all aspects of your business leads to positive change and future growth.
Need more help conducting an annual review of your small business? A SCORE mentor can help. Contact your mentor, or find one today.