Five-Year Checklist for a Small Business

Your small business's fifth anniversary is a time for celebration. Many new companies don't reach this landmark birthday, so you have reason to feel pride and satisfaction in your accomplishment. At the same time, this milestone marks a good time to step back, take a close look at your business, and make changes, if necessary, to insure another successful five years. To get you started, here is a five-year checklist for your small business.

Update Your Business Plan. A landmark date, such as a fifth anniversary, is the perfect time to update your business plan and create the blueprint for your business's next five years. The value of this exercise is that it forces you to focus on where your business is today, where you want it to go tomorrow and strategies to get it there.

While your business plan will give you a big-picture view of your business's long-term goals and strategies, here are four specific areas, related to employees, customers and cash, which deserve special attention as your business enters its second five years.

Review Your Human Resources. Start by evaluating whether you have the right employees in the right positions. Given your small business's limited resources, it is critical that each employee is contributing fully. Questions to ask yourself include whether your business has been able to attract the caliber of employee it needs and, if not, why not and what steps you can take to appeal to and keep the top-notch employees you need to grow your business.

Analyze Your Employee Benefits Package. Many small business start on a shoestring and are unable to offer their employees benefits. By your fifth year, you may have initiated an employee benefits program or, if you haven't, you may be considering introducing one. Whether you have a benefits program or are thinking about starting one, take the time to survey your employees about what benefits are most important to them. The results will help you prioritize where your benefits budget can be spent most productively for the company and for its workforce.

Go over Your Customer List. Do a thorough analysis of your customer list with three goals in mind. First, identify and reward your best customers. You probably know who they are, but you may be surprised at how much of your revenue comes from a relatively small percentage of your customers. Develop strategies to let them know how much you value their support and look for ways to grow your business with them. Second, identify good customers with the potential to be great customers and develop strategies to grow your business with them, perhaps with special offers, price discounts, better payments terms or value-added services. Finally, identify customers who, because they are high maintenance relative to the revenue they generate, slow payers, or low volume generators, are not profitable. They may be helping you cover your overhead, but otherwise are not high-value customers. Focus on how to minimize the cost of servicing these customers.

Evaluate Your Accounts Receivable and Collections Policies. You should do this periodically, but, certainly, the end of year five is a good time to examine what you are owed, especially payments that are overdue, and to develop collections strategies to recover that cash. Because no one enjoys asking for money, it is easy for a small business owner to put off collections efforts. However, this is counterproductive since it encourages customers with cash flow problems to pay you last (or not at all) and it cuts into the cash flow that you need to run and grow your business.

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