How To Audit Your Business During Economic Uncertainty
As a business owner, finding the time to audit your business can be challenging with the day-to-day operations. And you may be wondering how you’re every going to find the time now that you might be feeling a little anxious and worried these days due to the recent — but hopefully short-lived — economic uncertainty.
At times like this, you might even be considering shutting down your business or drastically dropping your prices. But great business owners know that even in the face of economic uncertainty, knee-jerk reactions can lead to worse consequences long after a recession ends.
Instead, the first step you should take is to assess where your are in order to make the best plans for your future. So while it might not feel like it, there is no better time for you to conduct an audit of your business.
What is an audit and why do you need it regularly?
Think of an audit like a review of your overall business health. If you come from an accounting background you should be quite familiar with the term and application to finances only.
But in this circumstance you should review not only financial data, but other areas and functions of your business as well such as:
- Ideal Client Avatar
- Products and Services
- Social Media
- Email Marketing
In times of rapid change, data is key to making strategic decisions by showing you what’s working and what’s not. But even when your business is doing well, you should review at least quarterly so you can prepare to pivot at any moment.
Diving into analytics can feel a little scary at first, but know that it’s all part of stepping into that role of CEO so you can have more control (and peace of mind) over your business, finances, and life. This is about strategy and risk mitigation above all else.
How do I get started auditing my business?
Start by dedicating a few hours out of your week to sit down and review your business analytics and trends –you should have no problem finding the time right now :).
During the process it helps to have a spreadsheet or workbook where your can track information and take notes.
You’ll also want to get your hands on as much data as possible from the past 3 months of operating. Don’t worry if you’re brand new. Any data can be useful in this process and now you’ll know what to look for going forward.
Here’s the type of data or analytics you can pull and some suggestions for how to find it:
- Email Provider Analytics (Mailchimp or Convertkit)
- Website Traffic (Google Analytics)
- AdvertisingTrends (Facebook Ads Manager)
- Social Media Analytics (Scheduler or the actual app i.e. Instagram Business Insights)
- Product/Services Sales (eCommerce App or Plugin, Payment Processor i.e. PayPal or Stripe)
Also, if you have employees, while I know it’s a tough time for everyone right now, being the CEO also requires taking a hard look at all expenses and the overhead costs associated with employees are usually the highest. So you will want to pull data in relation to pay and performance as well.
Don’t worry. You’re doing this so that you can say you’ve explored all other options before having to make the difficult decision of letting anyone go.
What should be I looking for while analyzing?
Ideal Client Avatar
You might be surprised to learn that the first place you should start is not all that juicy data you’ve just pulled but actually with your Ideal Client Avatar. When economic changes happen, everything about your client changes as well.
This recent shift is especially interesting because entire working habits and living situations have been impacted for the unforeseeable future as well. You’ll obviously need to take note of these changes because it’s going to impact many things for you as well.
Start by asking yourself these crucial questions:
- Has anything changed for or about your ideal client recently?
- If so, what? (Income, Job, Lifestyle, etc.)
- Do you still want to provide service or products for this ideal client?
- If no, who is your new Ideal Client Avatar?
Action Step: Update your current ICA profile(s) or create new ones.
Now it’s time to take a look at the area where you most likely spend at least 70% of your time, Marketing.
Content, Social Media, Email, and Advertising all role up to Marketing but each have different data benchmarks that should be tracked and vary by your business niche.
Here are a few standard data points and questions to consider for each:
- Website Traffic
- Time on Page
- What posts are driving the most traffic for your site and how long are users staying on the page?
- Can you create more content around popular content?
- Does this content still align with your current ICA or should it be updated?
- Is it still relevant and if so, have you made it evergreen?
- Engagement Rates
- What posts or images were liked the most?
- What posts generated the most engagement and why?
- Do your followers align with your current or new ICA?
- What new social media can you create?
- Open Rates
- Click Through Rates
- What lead magnets consistently attract email subscribers?
- What weekly emails have the highest open rates?
- What promotions had the highest click through rates?
- Cost Per Click (Traffic Ads) or Cost Per Mille (Conversion Ads)
- Total Ad Spend
- Return on Ad Spend (Revenue – Ad Spend = ROAS)
- Click Through Rates
- Audience Targeting
- What ads led to the greatest revenue for your business?
- How did these ads differ from others (Targeting, Copy, Creative, etc.)?
Products & Sales
Once you’ve analyzed your marketing, it’s good to take a look at your products and sales. Since the last thing you want to be doing is exhausting yourself creating things that no one buys. And trust that people will be more skeptical about where they invest now more than ever.
Start by making a list of all your products and services even if they don’t currently bring in revenue.
Now, taking your ICA and marketing analysis into account, ask yourself the following critical questions:
- Does this product/service still meet the need of my current (or future) ICA?
- How long did it take to create, maintain and or execute (if you’re a coach or consultant)?
- Given the time to create, maintain, or execute–was the revenue generated enough?
- Does the the price still align with my current (or future) ICA?
- Does it still align with my brand and overall business vision?
- If the product sales are low, can the product be updated? If so, what updates does it need?
- Can the product be bundled or Upsold with other products?
What do you do with the insights?
With the insights that you’ve gained from your audit you should now feel comfortable making the best decisions moving forward with your business.
Action Step: Ask yourself the below final questions:
- What marketing efforts are working for your business right now?
- What marketing efforts can you start?
- What marketing efforts can you stop?
- What marketing efforts can you consider for the future?
- What products/services should you update?
- What products/services should you end?
- What new products/services should you create?
- How many sales of each product/service will you have to make to meet your monthly revenue goal?
- How much money will you need to spend on advertising to meet your sales goal?
You may find that a marketing effort failed because you were not targeting the right audience, a product/service is quite popular but you haven’t spent enough time turning it into a consistent revenue stream, or you could discover a new income stream that will become the bread & butter of your business.
Bottom-line, even when feeling at the mercy of an economy that you have no control over, avoid making emotional decisions like downsizing or cutting prices until you have analyzed the data and risks because thankfully, your reaction when faced with uncertainty is something you can control and that’s what makes great leaders!