How to Conduct a Successful Audit on Your Business

The end of a year—and the start of a new one—is a natural time to reevaluate goals, develop new systems, and declutter those that no longer serve you. And while personal resolutions often dominate the year-end buzz, many entrepreneurs focus just as much energy on their business’s health as they do their own. So if you’re starting to envision how 2024 will look for your company, you’re in good company.

But before looking forward, you must consider your starting point: where you stand here and now. Effective future planning calls for a thorough understanding of your business as it is, revealing opportunities for growth and areas for improvement.

Conducting an audit on your business requires a frank and honest assessment of your likes, dislikes, strengths, weaknesses, opportunities, and threats. Oduberg Law, LLP’s Leah Weinberg warns that you’ll likely face some hard truths, but such self-exploration is necessary to reach meaningful takeaways.

“You've got to be completely honest with yourself,” she asserts. “Without a lot of self-awareness and straight-up honesty, you won't be able to properly analyze your business and make changes for the future.”

So when you’re ready to get real and shine an exposing light into the corners of your business, use these four categories to structure your audit and focus on what matters most.

Finances

A business cannot survive without a sufficient profit margin, so it’s wise to start by looking at your finances. While reviewing your books, you’ll likely gain insights into other parts of your business that will contribute to other areas of your audit, like staffing, marketing, and other expenses.

But as Vijay Goel of Bite Catering Couture notes, “conducting an audit in a catering company means more than simply reconciling the books.”

While every business should compare statements and confirm all transactions, there’s more to financial sustainability than accurate records.

Leading up to your audit, Goel recommends ensuring you have the proper infrastructure to collect data and run your numbers. Start by “defining the financial processes of the company and make sure the related data is in a financial system that can prepare the related reports,” he says.

Then, when it comes time to dig in, “test the categorization of key elements in the P&L and balance sheet by looking at receipts, reviewing budgets, reconciling budgeted spend against reality, and examining ratios around waste, overhead, etc.”

If numbers aren’t your thing, consider hiring a financial consultant or accountant to audit your books and make strategic recommendations for the year ahead.

Team

Next, it’s time to look at your team. Staffing is the largest expense for many business owners, so this isn’t an area to gloss over. Underperforming employees, poorly defined roles, and mismanagement can lead to financial losses, unhappy customers, and high turnover. 

House of Joy’s Samantha Leenheer suggests starting your team evaluation by “reviewing each role or position to see what is working and what isn't.” But she cautions against letting it become a one-sided assessment of an individual’s performance.

“Allow the staff member to review themselves and their positions to give them the opportunity to provide feedback on how they could perform better for the company or share where they see themselves growing within the company,” Leenheer encourages. “Having this open dialogue gives them a chance to be part of the solution and increase their stake in their position.”

Leenheer notes that a team review isn’t reserved solely for employees on payroll. “If you have contractors, touch base on how your needs or their service might have grown or shifted since first working together,” she says. Then, “take a look at other areas you are looking to outsource to grow your team.”

If your goal for the new year is to grow your client base, enhance your client experience, or even take more time off, hiring is likely in the cards. But before expanding your team, you need to first ensure that your existing team is optimized with the right people filling the right roles.

Marketing

It’s hard to reach your financial goals without attracting new customers, so you’ll need to take a hard look at your current marketing strategy. From who you’re targeting to how you reach them, focus on whether your efforts are producing the results you desire.

“The effectiveness of your marketing impacts every part of your business downstream,” assures Tayler Cusick-Hollman of Enji. Unfortunately, many business owners don’t spend enough time thinking about this side of the profitability equation.

“Many (if not most) wedding business owners haven't set specific goals, and they likely aren't tracking any metrics or KPIs (key performance indicators),” Cusick-Hollman reveals. “You need both in order to audit the effectiveness of your marketing and its impact on your business.”

But putting marketing on the back burner can ultimately render the rest of your audit’s insights irrelevant. After all, what’s a streamlined bookkeeping process or reliable team if you don’t have the clients to sustain your business?

“When it comes to pinpointing what you need to double down on or correct in your business, you absolutely should be looking in this space,” Cusick-Hollman confirms.

So take the time to dig out that old ICA worksheet, run through your GA4 reports, and update your KPI spreadsheet to ensure your marketing plan is built to last. If you outsource any part of your strategy, schedule a check-in with your consultant, contractor, or employee to confirm that your resources are producing a strong return on investment (ROI).

Tech

Technology supports every aspect of a modern business, from running payroll and sending invoices to pinpointing the best keywords for SEO success. And if your tech breaks down, it can cause a domino effect of disarray throughout your organization. So before closing out your audit, turn your attention to the systems and software you rely upon to keep your business running.

“Tech should have a starring role in your company audit,” confirms Nora Sheils of Rock Paper Coin and Bridal Bliss. “Are you using all the functionality of your current platforms? Have new features come out that you've been ignoring but could be a big asset to your systems? It might be an opportunity to streamline and save some money.”

Jacqueline Vizcaino of Tinted Events Design and Planning agrees, adding that tech can help reinforce other updates from your audit. “Consider whether your technology adequately tracks progress and facilitates the implementation of changes while keeping an eye on effectiveness,” she encourages. As a result, “audits of your business technology can yield improved outcomes.”

Once you’ve finished your audit, use the findings to form strategic goals and objectives. How can you turn what you’ve learned into actionable steps that elevate your business? Follow the SMART framework—specific, measurable, achievable, relevant, time-bound—to develop realistic goals and create an implementation plan for the year ahead.

Then, before wrapping up the process, put your next audit on the calendar! Regular check-ins allow you to track progress and adjust your goals as needed. Sheils recommends scheduling time quarterly or twice a year to run through the different areas of your business.

Ready to drive meaningful change in your business? Save this article to guide you through your own audit!