There are 4 self-audits/business audits every small business owner should do at least once a year to help them be more productive, get better results, and increase profits.
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It’s that time of year when everyone is hoping that they’re not going to get audited. While you’re thinking about that, let’s talk about four self-audits that you should be doing in your business for yourself.
Things that you need to be doing, probably at least once a year, maybe more often to make sure that you’re making progress, you’re increasing your profit margins, you’re decreasing your debts or your expenses, you are making sure that things are running efficiently, you are not driving yourself crazy. And all the other things that make for a healthy, successful business.
#1 – Financial Audits
The first self-audit that you should be doing in your business is the most traditional one: a financial audit.
Doing a financial audit is going to tell you where to focus your sales and your marketing efforts. It’s going to tell you if you’re on track with your taxes, or if you need to do some extra planning. It’s also going to show you how you can increase your profit margins as well as plan for emergencies or plan for the future.
This is where you’re going to gather up your financial documents, your statements, maybe your bookkeeping. And you’re going to take a good long look at the numbers. As you’re doing this you want to look at revenue versus profit.
Revenue vs profit
You want to know what your profit margins are, what’s being spent in your business.
Where and why is it being spent in those areas?
This is a really good time for you to look, to see, are there things that we need to cut back on? Are there things that we’re paying for that we’re not even using anymore? Where are the things, where’s the money going in our business so that we can really make sure that we are keeping things streamlined and efficient and lean, and then looking at where’s the money coming from in the business?
Oftentimes we don’t realize, but we might be getting really great profit margins and really great conversion rates on an area in our business, a service, or a product in our business and in seeing that we can know where to double down to be able to increase those things.
As you’re doing this, you might also want to look at your tax rate. Are you setting aside enough for taxes? Have you been setting aside enough? Does that number need to change, that percentage need to change? And this is probably something you need to pull your bookkeeper in on or your accountant in on to make sure that you’ve got that number solid. You might want to also do some budgeting or redo your budgeting, just to make sure that you’re allocating things appropriately. And you’re looking at your goals for the coming months or year so that you can look ahead to say, okay, what expenses are we going to have? And do we have enough set aside for that?
I also recommend that you look at your emergency funds.
So in your business, generally, you want to have three to 6 months of emergency funds set aside.
Sometimes over time our expenses can go up, but we haven’t adjusted our emergency fund to cover that. So when we thought we had 6 months, now we actually have 3 months.
And knowing that, doing that financial audit will give you that insight to know, okay, “What needs to be adjusted here? Where do I need to set aside a little bit more? What do I need to shift around in my budget? Or where are we shifting in terms of our strategies so that we know how to increase our profits.”
#2 – Tech Audit
The second self-audit you need to do in your business is a tech audit.
A tech audit is going to tell you where you need to streamline and simplify your systems in order to cut expenses, and again, increase your profit margins.
The easiest way to do a tech audit is while you’re actually looking over those financial statements, start writing down all of the technology that you pay for on a monthly or annual basis. And it is helpful to look over the past year to make sure that you’re not forgetting anything when you’re doing this audit.
As you make a list of all of the tech that you’re using in your business, also write down what that tech is doing for you so that you’re clear on the purpose of it.
Look For Redundancies
The next thing you want to do with this list is to go into each of these systems and figure out what else they do that you might not realize. What you’re really looking for here is redundancies in your systems. You might realize that you’ve got two systems that are doing two different things. Whereas this system actually does both things. This is going to help you to streamline and simplify, getting things into one system instead of spread across many.
This isn’t always possible. Sometimes you do need multiple systems if one system just does it better, but it is helpful to know what each system does because as they improve over time, you may also want to change these down the road.
You may also want to just do a little bit of research to find out, is there a new software out there that does more of these things?
So if you’ve got an email service provider and you’ve got a sales system over here, and you’ve got this over there and this over there, is there something that’s been developed that’s been newly launched that might actually combine all of these into one system for you?
Now you do want to be careful, obviously, because a lot of all-in-one systems are not actually as great as systems that specialize in one thing. So do your research, make sure that you’re being clear about what you’re picking and why don’t just go after something cause it’s cheaper or it’s fancy and new, make sure that it’s going to do what you need it to do.
I recently did a tech audit like this and realized that I have systems that do similar things.
So for instance, I was using Loom to do video responses, video training, things like that, and then found out that Vimeo offers the same thing without any limitations and it’s actually easier to use and it’s part of a system that we were already using. So this helped us to streamline into one thing instead of having two systems that we were paying for.
We found the same thing as well when we did our questionnaires for our Inner Circle, when we have new members come in, they fill out an intake form so that we can get to know where they are in their business. We were doing this through a separate system, then come to find out, ClickUp does this, so we created a form in ClickUp. It actually takes all their information and puts it into a task in our system, which helps us to manage those clients better. So this a way that we were able to replace something with a better option, that streamlined into a system that we were already using, saving us a lot of time and energy.
So being aware of the fact that systems change software changes, and we need to make sure that we’re staying up to date with those things on a regular basis so that we’re not wasting time. We’re not wasting money.
This will help us to make sure that our business is staying up to speed and moving forward and not getting stalled or slowed down or bogged down by all these unnecessary things.
#3 – Time Audit
The third self-audit that you need to do in your business is a time audit.
This is probably the least fun, but one of the most important. A time audit is going to show you where your systems and strategies might need work, how to better schedule things, to increase flow and productivity and how to make sure that you’re saving energy on the things that you’re working on.
Nobody loves to do a time audit.
They’re tedious. They take a lot of time, but they are so eye-opening. What you think, you know, in your mind is completely different than what you’re actually going to get black and white on paper once you actually do a time audit.
Now to appropriately do this, you need to do this over the span of one or more weeks. And the way that I recommend that you do it is to set a timer on your phone that’s repeatable.
So for instance, on an iPhone, if you set a 30-minute timer, you can hit stop or you can hit repeat at that time. What I would do is set that timer for 15-30 minutes. When that timer goes off, you hit repeat and you write down what you were doing in that time. Then you continue working. The timer goes off, you hit repeat, you write down what you’ve been doing over the last 15 to 30 minutes.
This is not fun.
Again, it’s tedious, but it is so eye-opening. It is so enlightening. It is such a slap in the face. When you realize how much time you’re actually spending on the things that you thought were not taking that much time and that you know, are actually not conducive to progress in your business. The non-income producing activities that you think you’re spending five minutes on are actually taking hours of your day.
Now, when you do this, you also need to schedule time to sit down afterward and go through it. Really categorizing the type of work that you’re doing and figuring out how much time you’re spending on each thing. That’s where the eye-opening work comes from.
You’re going to get a lot of aha moments just as you’re filling that out.
But when you sit down and you total things up, that’s where you’re going to get an idea of:
- What actually needs your attention
- What needs to be shifted
- What systems you are using that are not saving you time
- How you can rearrange your schedule so that you’re batching certain things together
The ideas and the inspiration and the wisdom that’s going to come out of doing this SO outweighs the drudgery, the complete and utter hating the process of doing this.
But here’s the real kicker.
You don’t just need to do this for yourself. If you have team members, you really need to get them doing a time audit as well. This is for two reasons. Not because they are not using their time efficiently, but because you need to have a realistic idea of how long it takes them to do something.
I’m always giving my team something and thinking they can do it in 15 minutes. When in actuality it takes 45 or it takes an hour. In order for me to understand what’s realistic. I have them track their time on certain things as well so that I can understand how better to schedule things out, how much I should be putting on their plate, what hours they’re working, and so on.
So there’s a lot of enlightenment that comes from this for them as well, but mostly for you as a business owner, to make sure that everybody is doing the right things, you’re on the right page, you’re not overwhelming people, you’re not overwhelming yourself, and you’re able to actually make progress on things.
If you’ve ever done a time audit, I would love for you to comment below and share your experience. And if you have not done a time audit, but you have a hunch as to where some of your time might be getting wasted, I would love for you to comment and let me know what that is.
#4 – Energy Audit
The fourth self-audit you need to do in your business is an energy audit. And this might be one of probably the most important one, especially if you want to make sure that you’re still loving what you do a couple of years from now.
An energy audit is going to tell you where you and your team’s Zone Of Genius is. And it’s going to show you who your next hire is so that you can increase flow and fulfillment in your business because it’s really hard to be productive and make money if you’re constantly burning yourself out, doing the wrong things.
So what is an energy audit exactly?
This is where you’re going to make a list of the things that you do in your business that give you energy vs. drain you of energy. And you’re going to compare this with your time audit, to figure out how much of your time is going towards your energy drains versus your energy givers. We talked about this in How To Avoid Burnout, talking about moving yourself away from your energy drains, your energy leaks and getting yourself more and more into your Zone Of Genius. The thing that you’re really good at that also inspires you encourages you, gives you energy and you want your team to do this as well.
When I was bringing on a new assistant, I had myself and my current assistant do the same thing. We sat down and we wrote out: “What are the things that we love to do? What are the things that we hate to do?”
And we looked at those things and that showed us who our next hire needed to be.
We needed somebody with:
- A highly analytical mind that loved details
- Good at data entry
- Good at spotting things
- Good at just like getting into the flow and getting stuff done.
And that’s who we found and she’s freaking amazing. And I just happened to be related to her, that’s also why she’s amazing.
But I wouldn’t have known that if we hadn’t done the work to sit down both of us and figure out where the energy drains in our business, where are the things that are giving us energy, where are the things that like, what’s our Zone Of Genius for everybody on the team so that we can make sure we have the right people in the right place.
When it’s time to bring on another team member, we’ll do the same thing with all of us. Where’s our energy going? What takes the most energy? What do we not love? And who do we need to bring in that does love that thing so that we can start making more progress again, as a team.
So even if you are not in the space where you’re ready to start hiring, you can still do this and then just ask yourself, “what can I do to get myself away from the energy drains and doing more of the things that give me energy?”, because energy is the lifeblood of life and business.
And if you ain’t got it, you ain’t got business for very long.
- What can you do?
- What strategies can you implement?
- How can you get creative to be able to start eliminating those energy leaks, those energy drains and start really focusing on the things that feeds you versus wipe you out?
If you intend to do any of these self-audits in your business, let me know which one you’re going to start with. Or if you are brave enough to start with all four of them, they take some time and energy. So pace yourself there.
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What about you, boss lady?
Which of these 4 self-audits do you think you most need to do?
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