The end of the year (or the very beginning of a new one) can be a blur, no matter what line of business you’re in.
For some retailers, it’s the busiest time of the year, where demand can challenge the resources and capacity of the business.
For other business owners, it’s an annual dip, where business inquiries drop off and staff and customers turn their attention to holidays and the new year.
Either way, this is a good point to take stock of your business and make some plans for the 12 months ahead. In this article, we’ll give you some ideas to help you do just that.
- Why entrepreneurs should stop and reflect
- 7 key business areas to focus on
- How your POS can help
- What to do after your end-of-year reflection
Let’s take a look at what business owners like you have to say about end-of-year reviews, and how they go about them.
New year, new POS
Looking for a better way to manage your retail business? Watch a demo of Lightspeed to discover how our platform can help your business grow.
Why should business owners stop and reflect?
Life has been hectic lately. These days, it can be easy to get distracted and forget to slow down. The end of the year signals that it really is time to pause and check in.
With the retail landscape changing so rapidly, reflection is more important than ever. Inflation, the post-pandemic shakeup and ever-evolving consumer expectations all create a challenging environment in 2023. The insights you get from a good year review could mean the difference between succeeding and not.
“We talk about our accomplishments and what transpired at our end-of-year review in December,” said Andrei Kurtuy, co-founder and CCO of Novorésumé, an online résumé builder. “We also go over what worked and didn’t work. It enables us to determine our strengths and limitations. It makes us aware of our inadequacies and motivates us to do better next year.”
For Jerry Ford, the Owner of 4WD Life, business is no longer solely about driving profits, improving sales graphs, or capturing more market share. “Today, entrepreneurs have to work on solutions related to crisis management, ensuring business stability, long-term growth or even survival,” he said.
With so much on everyone’s plate, reflection and planning are even more valuable than before. Plans that worked in previous times of inflation might not have the same impact now, so take the time to get the facts and build your strategy from there.
Key business areas to focus on
So where to start? Here are some of the key areas for business owners to reflect on during an end-of-year business review.
1. Your employees
Businesses must review employee retention by setting appropriate metrics, suggests Jared Stern, CEO and founder of Uplift Legal Funding. “Retention rate per manager, new employee satisfaction rate and voluntary turnover rate are essential metrics. All these data will provide valuable inputs on areas that need work,” he said.
Krista Haws, the Owner of Dripped Coffee, believes stay interviews are a great way to dig deeper into how employees view their roles. “Reviewing the feedback gathered from these interviews gives leaders tangible information on the performance of existing retention and management practices,” she said.
Different locations will have unique dynamics between their teams. When you’re reviewing the data you’ve collected, remember to compare your metrics between locations to see if any are standing out, good or bad. That way, when it comes time to allocate resources to any improvements you might need to make, you can budget thoughtfully.
2. Your customer satisfaction
“Reflect on customer satisfaction by involving customers in the process,” said Ruben Gamez, CEO and founder of SignWell, which provides tools to help businesses with contracts and legally binding e-signatures. “Surveys or questionnaires can be shared to understand ratings amidst competition. Customers are the most honest and brutal judges. It can be a valuable piece of information to act upon.”
If you’re not already collecting customer feedback through surveys, implement a system for the new year. Make sure filling out the survey has a reward attached, like an entry for a gift card lottery, to entice more responses.
Like employee team dynamics, various factors will influence customer satisfaction by location and channel. Look at your feedback as a whole for any cross-operation trends, but then break it down by store (including your online store) to pinpoint any localized areas of weakness.
3. Your customer journey
All end-of-year reviews should begin with the evaluating of the customer journey. It is intertwined with customer satisfaction, said Yuvi Alpert, the Founder and CEO of Noémie, a direct-to-consumer fine jewelry brand. When you understand your customer journey, you can understand important metrics like customer retention.
“Return customers spend, on average, more than twice the amount of first-time patrons, and are five times less expensive than new customer acquisitions,” he said.
“Looking beyond service, and examining every part of the customer journey from first impression, to interaction, to product presentation, support, check-out and follow-up, is critical to a business’s long-term success,” he added.
If you haven’t updated your customer personas since 2020, take some time to review them now. As the dust settles on pandemic-era adaptations and innovations, some customers will be taking new buying journeys. BOPIS (buy online, pickup in store) and curbside pickup, for example, seem to be here to stay.
4. Your marketing performance
As you know, you can’t reach your customers without the right marketing. But how do you know what’s working and what’s not?
Don’t forget to check which content drove the best engagement or resulted in the most conversions on your website. Review these metrics to help you create effective content.
And explore your email list. Your percentage of social media likes or followers hardly ever corresponds with your client growth. Instead, take account of the increase in your email list subscribers as a better indicator of your reach.
5. Your financial position
End-of-year is a good time to take stock of your business’s financial performance too.
2022 was a rollercoaster that started out strong for many retail industries before softening as the year went on. Still, with 2020 and 2021 being unusual in the wider scope of history, it was the first year of true recovery and growth for some retailers. Compare your performance to the last year, as well as the last five years and your competitors.
“Look at industry averages and economic indicators in your region to gain more perspective,” said Nate Tsang, Founder and CEO at WallStreetZen. “There are going to be aspects of any financial review that you don’t like, but they’re not all in your control. Perspective helps.”
Understand your expenses
“Carefully examine all the expenses you incurred over the last year, including equipment costs as well as your organization’s newfound investment ventures,” said Janet Patterson, VP of Highway Title Loans. “If your company made an investment, analyze the returns it has produced for your organization. But, if the costs exceed expectations, you know it’s time to slash it from next year’s expenses.”
Don’t forget about Section 179, which US-based businesses can use to immediately deduct hardware and software expenses that they would have otherwise deducted over multiple years.
In light of fuel costs impacting shipping fees, it may also be time to revisit your wholesaler relationships. Could you save some expenses by switching to suppliers closer to home?
Forecast your cash flow
But it’s not all about cost-cutting. You need to plan for potential growth too.
“Take stock of potential growth opportunities based on this year’s performance,” said Hays Bailey, Director of Sheqsy, a mobile app that helps organizations safeguard their remote workforce through a lone worker security platform.
“You can then examine your sales and cash flow over several months to determine the optimal time to implement those plans,” he said. “If you intend to borrow money to expand your business, check your business’s credit history to determine whether you’re ready to pursue funding from a lender, or whether you should focus on building your credit over the next year.”
6. Your tech stack
Are your current tools serving you well? Can these solutions support your growth? Are your apps tightly integrated?
Take some time to go over every element of your tech stack. Consider conducting interviews with your in-store and back office employees to get their view on things. As they’re interacting with your tech every day, they’ll have insights you might not.
Ultimately, you’ll want to have your point of sale, inventory management software, business analytics, payment processing, ecommerce, customer loyalty and accounting all speaking to each other as seamlessly as possible. That could mean switching to a commerce platform like Lightspeed for more efficient operations.
7. The competitive landscape
How did your competitors do in 2022? Did they open more locations or expand into new markets? Have any competitors expanded their digital or omnichannel functionalities? Did any need to do layoffs or sell off parts of their business?
Make sure you answer these questions for your biggest competitors and for the industry as a whole. If you stand out from trends seen in your competitors, good or bad, analyze where and why. This information will enrich your end of year review and enable you to make more targeted growth decisions in the coming year.
How your POS system can help
As a retailer, your POS system powers your front counter. But it can do more than that—a POS system can be more like a comprehensive retail management platform.
Commerce platforms like Lightspeed gather data that helps you answer your end of year review questions. That data helps you track your goals throughout the year, as well.
Inventory, eCommerce, analytics, payments, loyalty and more from one system
Once you have that data in hand, you can use the same retail management platform to act on it.
Is a particular brand selling slowly at a location? Transfer the inventory to where it is selling well. Need to increase your customer retention rate? Choose a POS with loyalty capabilities. Want to cut down on the time it takes to process orders in store and online? Switch to integrated payments and eCommerce.
We’re experts in retail management platforms—we built Lightspeed to make complex retail simple.
What to do after your end-of-year reflection
Here’s what to do once you’ve finished your review.
Share your review
When your end-of-year review is complete, you should share it with your teams and other stakeholders. This helps them understand your progress.
“You need to get your projections and a new strategic plan in place immediately, and be able to kick off the new year with that strategy,” said Daniel Javor, Founder and CEO of Step by Step Business. “Know your target KPIs, other metrics and make sure your plan is designed around those goals.”
Create an action plan
The next step is to come up with strategies for the next year. “Sit with all your team and discuss things such as sales and marketing with them. This will also help employees understand what areas to improve,” said Katy Wrench, a digital marketer, at Hometree.
Set sub-goals and timelines
Start with large goals, whether it’s revenue, business growth or some other metric that you decide. “Then break that goal down into specific sub-goals with timelines. That way, large goals are more digestible and you’ll chip away at them little by little,” said Mike Funkhouser, CEO of Small Business Mentor.
Set your sub-goals by your business as a whole, then by location and channel. That way, you’re not overlooking anything on the macro or micro level.
Have a successful year in business
Whether this year’s been terrific or tough, we wish you the very best for your next year in business. If we can help in any way, don’t hesitate to contact one of our product experts today.
News you care about. Tips you can use.
Everything your business needs to grow, delivered straight to your inbox.