Four steps to completing your quarterly review

The four steps below are a high level guide to getting your quarterly review done as efficiently and effectively as possible, laying the ground work for your business to have the most profitable year yet.

Step 1 – Measure

The first step is to get your information organised.

• The assumption is that you set your business objectives at the beginning of the financial year and that your accounts are up-to-date (and ready for submitting your BAS).  If one or both of these are not the case then that is the place to start.  What is measured is driven by your business objectives.
• Your accounting package will provide most of what you need – the profit and loss, balance sheet and cashflow.  A copy of your sales register, customer numbers and results of your marketing activities will also be useful information to provide a broader analysis of your business.
• The targets and goals that you have set for the business will dictate the information you need.  For example if your strategic initiative is to improve profit and the tactic used is that all projects come in on budget and according to the quotation, you will need to track quotes and project performance.

Step 2 – Report

Now organise the information into a logical order so that it is easy to analyse.  A simple excel dashboard that records the KPIs (Key Performance Indicators) for your business is adequate and easy to use.

• You might need to include additional measures to give context to your KPIs.
• Including the actual results for a corresponding period, such as last quarter and for the same quarter last year, provides an internal context for performance.
• It might also be helpful to put values on % targets.  For example if your target was to deliver  100% of projects on budget and your result was 99%, the value of the projects is required to give this context to understand the significance of this variation.
• Warning:  There is such a thing as too much data.  Stick to the KPIs and any additional measures that provide context.

Step 3 – Analyse

What worked?  What didn’t work?  You now have a consolidated view of the key measures for your business and how they performed against target and expectation.

Categorise the performance result, based on the following:

1. On track
2. Negligible
3. Significant

Once you have identified those KPIs that have had a significant variation from target (and there should only be a few) it is time to drill down to understand the reasons why.  It is important to be critical about the results and get to the core of what the issue really is.  Be as specific and as honest as possible.  The purpose of this exercise is to identify what you can adjust for next quarter.

Questions to ask:
What factors impacted the result?  Were there external factors that caused as significant change such as the economy or technological change?  Was the variance due to internal factors?  Was it strategic, and your planning could have been better?  Was it internal operations where execution did not go as planned (good and bad)?  Which opportunities were missed and why?

Step 4 – Improve

• Once you understand the reasons why performance varied from expectation, and this can be positively and negatively, it is now time to formulate a plan to get the business benefiting from these learnings.  This is the most important part of completing the Quarterly review.
• If things are off track, what needs to be done to get back on track?
• Decide what you need to do more of and what you need to do less of. Make sure you are treating the right thing.  For example if sales are down because your value proposition is not working with your target audience then there is little value in increasing the dollars in your marketing activity.
• Write down the activities that you are going to implement to improve business performance for the next quarter.  Too many things on the list and nothing will get done, so keep it to 2-3.  Incorporate these in your weekly/monthly activities list so that they get implemented.
• As a guide, this process should take you 2-4 hours. This is a review exercise to understand the health of your business and to move it back on track, if necessary.  You only need to review the items of exception and there shouldn’t be too many of these.  If you have more than a couple of items then something is wrong.

Improving business performance is rarely one thing, it is generally a combination of things working together to deliver the result.  A formal quarterly review assesses that the combination is working correctly to deliver the expected results, and provides an opportunity to tweak things to give your business the best chance of achieving the desired results.  Remember your business plan is your roadmap and your quarterly review is like the road signs that indicate that you are going in the right direction.