At least once a year, my wife and I assess items inside and outside our home, from clothes and appliances to items in storage, furniture and automobiles. We check to see if things need replacing, special cleaning, or if they just need to be removed. You may have heard the term "Spring Cleaning". By doing these regular check-ups we extend the life of our property and make sure they are in prime working condition.
Your business, like your home, can benefit from a similar cleaning. I perform my business cleaning in the fall before I enter fourth quarter. In other words, Fall Cleaning. It might not sound as snappy as Spring Cleaning, but it gets the job done just the same.
The idea of a fall business cleaning is to go through all the processes of your business to make sure they are performing efficiently and effectively. You document the ones that are up to snuff, and repair or replace the ones that aren't.
The following is a list of items I check in my Fall Business Cleaning:
Business Financials
Financials are the lifeblood of your business. I like to print out a year to date profit and loss statement, a current balance sheet, a current cash flow statement, and a budget report. Even just a quick look at those four items will immediately tell you how your business is performing.
The balance sheet will give you a quick glance at your assets and liabilities as well as your net worth. Comparing that to a previous period's data, you can tell whether your business is growing or receding. You can tell if you're increasing assets or going further into debt. If the former is true, you're doing something right, if the latter is true, you need to take a closer look at your processes and try to understand why you're getting behind or running into the red.
A year to date profit and loss statement will show you whether your company is making money or losing it. By the third quarter you should have enough trending data in your profit and loss to see where your money is being spent. If you're paying a particular vendor too much you might want to go back and renegotiate terms if possible.
A cash flow statement will show you how your business moves cash on a monthly or yearly basis. Did you have enough cash from operations to run payroll and pay expenses this year or did you run behind a few months. A forward looking cash flow statement will allow you estimate revenue in future months and compare that to projected expenses to make sure you won't go into the red with your cash flow. Looking at this important financial report allows you to notice any potential problems before they happen giving you time to address these concerns and take necessary measure to prevent them.
Finally, a budget report tells you how you are faring in each expense and income category. It also allows you to more accurately plan your cash flow reports. You can see if you've gone over budget with any particular item, and if so, you'll want to investigate further. Did rising oil prices make you over budget on fuel costs, or have you just been leaving your heater on while you're out of the office? Did prices on office products go up, or are your employees raiding the supply closet? A budget report also allows you to see how close to your limits you are coming. At the end of third quarter, you might notice that you've spent more than 75% in a category, which means you need to get a handle on spending there. For categories where you have spent less than expected you might be able to adjust your expense projections downward for future periods, which will increase your cash flow.
I can't suggest more strongly how important it is to review your business financials. Noticing trends in these reports can make the difference between a successful business and a business on the brink of failure. It's the first step in the fall cleaning process.
De-clutter your work space
It doesn't matter if you have an office with 150,000 sf, or you work from home in a 20 sf closet, you need to have a clean work space. Studies have shown that neat, organized work spaces helps the mind focus on the task at hand. Make sure the path between your key office machines are clear and free of clutter. You want a straight line between your computers, phones, and your printers and fax machines, preferably they should all be within reach from your chair.
Organize your file cabinets and keep your current customer folders neat and handy. Anything that has not been used or referenced in six months or longer needs to go into storage.
Review your key processes
Processes are the key to any business, whether you work in manufacturing or the ER. Processes are the road maps for our daily tasks, and help to keep our work consistent and of high quality. Make a point to look at your systems and make sure they're working correctly.
Document Templates
In our business, we make time saving templates for everything we do. When we speak with potential clients on the phone we have a template that guides us through a series of questions to determine whether the client has all the necessary documents for financing. Once we've starting working with that client, we have a document template that outlines every step in the process of getting that client financing, from the application to the closing of the loan. We even have internal templates that tell us everything from how to label our files, what color folders to use, and how we fill out expense reports. These processes make our work consistent and therefore they are easy to get new employees up to speed quickly. They also serve as the basis for our employee manual, which is essentially a collection our most important processes with a summary explanation of why we do them. Think about the processes that you have in your office.
Think about the tasks you complete every day and think about how you might be able to standardize them and make templates for these tasks so there are no deviations from the way they should be completed. Doing so will save you time and energy, make your office more efficient, and your employees will be more productive, which will translate directly to your bottom line.
Big business and Fortune 500 firms perform their cleaning on a more regular basis, sometimes daily. For the small business that might be overkill, but you can set a cleaning schedule as you feel necessary. Like spring cleaning, fall cleaning can help extend the life of your business and ensure its longevity and profitability.
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