Why Empowered Entrepreneurs Self Audit Their Businesses

As a business owner, you’ll likely hear about being ‘audited’ and know that everyone dreads this phrase. While you may need audited financial statements for your company each year (depending on your circumstances) or you may be chosen by Revenue for a tax audit, this is not what we are talking about today. Yes, those other audits are extremely important, but empowered business owners should go through self audits at least once a year to find areas of improved efficiency, stop profit leaks and time wasting.

Below I’ve gone through my top 4 ways to self audit your business.

Financial Audits

Obviously, this is the most traditional type of audit but as you’ve probably heard me saying many times, don’t leave this one until the end of your financial year when the information is already out of date. You need to be performing financial audits on your business at least every quarter. Why? It can tell you where you need to focus your sales and your marketing efforts, how are you tracking with your taxes or do you need to make changes so you have enough to cover your annual liability, are you as profitable as you think and where you need to plan for the future.

To do this you need to get your bookkeeping up to date, gather your bank statements and other financial information and take a good look at the numbers. You want to look at your sales and how they are broken down by service offering. You want to look at your expenses in detail to see what you can stop, switch or consolidate on. You need to track your profit as a percentage of your sales and compare this to prior months and years to see if the business is growing or stagnating.

Most importantly, you need to review your cash flow. Get your bank statements out and see where the cash is coming in from and where your cash is going. I’ve had so many conversations with business owners who have profit and loss statements showing healthy margins but they have no money in the bank. Having this information on where your cash is going is key to making quick changes before your business is leaking cash to the extent that your business is unsustainable.

While you are going through this process, you might want to draft or review your budget. Where do changes need to be made? Is the budget still reflective of where your business is heading? Is your budget showing where you might have difficulties in future months that you can make plans for now? Think of those annual invoices that come in and need to be paid immediately.

Finally, look at your cash pots. If you follow the process of setting aside cash each month to cover things like a 3 month expense buffer or tax liabilities, do your pots have enough in them? What if your sales suddenly dropped off and you had to cover costs with no income, or if your tax liability was higher than expected, do you have enough?

Tech Audits

This type of audit is particularly important for online businesses. It will allow you to review what systems you are using and how, in order to save costs and hopefully streamline your processes and gain efficiencies in how you are doing things.

The easiest way to do this is to start after you have done your financial audit. Start by writing down all of the tech subscriptions you are paying for on a monthly or annual basis and why you are using them. The next step is to go into each of these systems and figure out what else they do that you are not currently using them for. You are looking for ways to streamline and simplify your processes and combine processes into as few systems as possible. For example, can your course platform also be used for email marketing? Software is changing all of the time and you may find that platforms you are using have new functionality that you may not be aware of. This may save you costs and increase your profit margins without affecting how you run your business that much.

Time Audits

Ok, I won’t lie, this one is the dullest audit to complete but honestly is so important if you want to see improvements in your business. Tracking your time is tedious but the results can be so eye opening. Where you think you are spending your time, can be very different to where you are actually spending your time!

A time audit will show you where your systems and strategies might need work, how to better schedule your time to increase flow in how you are doing things and where you have pockets of lost or inefficient time that you may not be aware of. 

So how do you do this? You want to track your time over a full week. Use a timer set at 30 minute intervals that allows you to stop or repeat the tasks. You can write down what you are doing in each of these 30 minute intervals or you can use an app like Toogl to record the information. This will be tedious but it will be enlightening! Next you need to schedule time to sit down and review the information you’ve gathered. This is where you will see patterns in how you are spending your time and what needs your attention. It will tell you what systems are not working and what areas need to be changed so you can make sure that no matter how many hours you are working in your business, you are making the most out of them. This might be as simple as using calendar blocking to batch types of activities together so that you can get into that flow and be more productive.

The knowledge and awareness that comes from doing this far outweighs the pain of completing the exercise in the first place. Keep this in mind!

Energy Audits

Not a traditional one, but still something that I think needs to be included here. An energy audit will tell you where you and your teams focus is going, but also, where your zone of genius is. It might also show you where your next team member will come from!

To do this, you are going to make a list of all of those things in your business that give you energy and those that take away energy. Compare this with your time audit information and see how much of your time is going to energy givers versus energy drainers. This is essential in how to avoid burnout and get yourself into a place where the activities you spend most of your time on in your business are those that inspire and motivate you. This can only benefit your business in the long term. 

You want your team members to do the same thing too. By combining those tasks that you and your team find energy draining, you may have the job description for your next hire. Remember that what you find draining might be something that lights up a new team member! If you are not ready to hire a team member, you need to get creative in finding strategies on how to move away from the energy drains and get to a place where you are spending more time in those energy giving activities. This might be as simple as putting an automatic response on your emails to say your response time is 48hours so that you don’t have to constantly feel the burden of answering emails when you are creating or delivering client work.

Each of these audits are incredibly important for business owners who want to take more control over their business finances and improve efficiencies in their business so that they are not overworked or not profitable. 

While they may not seem like the traditional way to review your business, I would recommend building this activity into your annual review process. By doing so, you are looking at the facts on how your business is performing rather than how you think your business is doing. Empowered business owners will take action and use this information to make changes and plan for a more profitable year ahead.

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