Most people agree that annual medical examinations are vital. They make it possible to identify all kinds of problems – the serious and the not-so-serious – before they become critical. In my case, I believe an annual evaluation saved my life.
I was having an annual checkup for an enlarged prostate. In this procedure, called a cystoscopy, the doctor uses a TV camera to go through the prostate into the bladder. It is not painful even without pain medication.
During the procedure, the doctor noticed a brown spot on my bladder and said, “We need to remove that.” Within a week, I was having non-invasive surgery to remove the spot.
When the doctor came to my room after the surgery, he said it was cancer but since they had caught it so early, there would need no further treatment besides annual checkups. Had this not been discovered during a routine checkup, my story might have been very different.
Annual evaluations are important for individuals, and they are critical for small businesses, as well. They allow entrepreneurs to identify potential problem areas early and address them.
Although many entrepreneurs think it is adequate only to look at their income statements, having high profits one year is not a good barometer of future performance. It is vital you have “outside eyes” come in and do an independent evaluation every year.
This evaluation should cover financials as well as insurance, legal, marketing and business culture. The evaluator should investigate trends in income statements and balance sheets, as well as how successful the firm was in achieving its strategic plan. If the firm missed a goal, it should determine why and what can be done to improve future results.
The evaluator should also talk with staff and assess the health of the company’s culture. Other critical tasks are evaluating any legal issues and assessing their financial impact, as well as looking at insurance coverage.
When hiring someone for this work, think of it as an investment in the long-term vitality of your business rather than an expense. You should be able to find someone to spend a day or two going over your business as part of this vital process.
Now go out and set up a process by which evaluations are performed annually. This is so important to the success of your business.
Jerry Osteryoung, a business consultant and Jim Moran professor of entrepreneurship (emeritus) and professor of finance (emeritus) at Florida State University, can be reached at firstname.lastname@example.org.