Remember that time of the year when you sat in your manager’s office and they proceeded to go through the highlights reel for that year — the good, the bad, and the areas that could use a little improvement? Although many employees dread the annual performance review, it gave you a clear sense of how you were viewed and valued in your organization. You left the meeting with a clear understanding of whether or not you made the professional grade.

When you become your own boss, however, you realize that no one is peering over your shoulder, grading you. Most small business owners view success through the lens of profit — but that could be detrimental to your business. Are you listening to, and acting on, customer feedback? Are you keeping pace with changes in your industry? Are you running your business efficiently? Are your employees motivated and loyal? Are you working on your business or only in your business?

Short-term revenue gains don’t present a clear picture of professional success, and, more importantly, long-term growth. If you’re in this for the long haul, take the time to create your own report card without grading yourself on a curve.

Set Your Review Goals

Performance reviews only work if you put in the work. Before you start the review process, keep in mind the following goals:

  • Take it seriously. It’s easy to joke about creating and acting on your own report card, but know that you’re taking real steps to invest in the longevity of your small business. You’re giving an objective, fair assessment of the past year and determining your wins, losses, and areas of opportunity. Don’t be afraid of your failures — learning from them is the key to make your business thrive.
  • Be objective. There’s a difference between a reason and an excuse, so don’t make excuses for any missteps. Treat this review as you would treat a fellow employee, that is, take your emotional self out of the equation.
  • Be detailed. Examine every aspect of your business and take no shortcuts.
  • Focus on action and insights. Listen to what people and the data are telling you. Data is objective and it doesn’t lie.
  • Commit the process to paper. Consider your annual performance review as a benchmark, a point of reference, and a chart for future growth.

10 Steps to Grading Your Business Performance

Now that you’ve established the ground rules for your self-evaluation, here are the 10 steps you need to take to grade your business performance:

1. Set Your Goals and Objectives

Define what you had set out to achieve for the year (or relevant time period). All businesses focus on sales, so start at the bottom line and go beyond it. Were you looking to cut costs, deploy technology, and create processes that would make your business more efficient? Did you want to diversify or launch a new location? Did you commit to working more on your business than in it? Establish both quantitative and qualitative goals and objectives.

2. Design the Evaluation Categories

Your categories must serve the goals and objectives, and they can represent anything from business growth to operations and management. Examples of categories to evaluate could include employee productivity, knowledge growth, customer service management, and new product and service offerings.

3. Gather the Data

Start with your receipts and bookkeeping, but also include any relevant third-party analytics and data from any systems and software you use for your business. This could be anything from customer surveys and email marketing, to social media performance and product-specific sales data. Your data and feedback (step 4) will bring clarity to your evaluation categories.

4. Get External Feedback

Data may tell the main story, but people provide the color commentary. There’s nothing more powerful than hearing feedback from your customers, employees, and third-party vendors. You can create simple and free anonymous surveys using SurveyMonkey or QuestionPro and send them to people for feedback. You could collect “How did we do” paper surveys and cards at your physical store location, if that makes sense for your business. Also, interview your front-line staff. They’re on the pulse of the day-to-day issues, and can give you deeper insights into how your business is doing.

5. Document Your Self-Review

This may be obvious, but put all of this information on paper or screen. The process will only work if you make yourself accountable to your review. You can adapt an employee performance review template if you need help collecting and organizing your thoughts.

6. Perform a Small Business SWOT

SWOT stands for strengths, weaknesses, opportunities, and threats. This is a simple and smart way to distill all of your learnings and identify the implications for your business. An effective small business SWOT analysis will pose questions in each of the four categories to generate data that you can use to evaluate the strengths, weaknesses, opportunities, and threats specific to your small business.

7. Give Yourself a Report Card

Now that you’ve compiled the data, map it to your evaluation categories, see where you stand against your competitors, and determine if you met your goals and objectives. Then you can rate your performance. How did you do? Compare this year to the prior year. Where do you come out? If you’re stumped on how to create a report card, there are a variety of performance appraisal models to help you assess your performance. Also, while it’s important to focus on areas where you came up short, the process should be more about what you’ve learned and how you can use that learning to move your business forward, rather than thinking about your missteps as failures.

8. Design a Strategy for Improvement

Now that you know how you’ve done, make a plan for how you’ll take your business to the next level. How will you address blind spots and areas for improvement? This may involve taking online courses with Udemy or, hiring freelancers or consultants, or even working with a business or life coach.

9. Set New Goals and Objectives

Based on your new strategy and the awareness of what you need to do going into the next year, set measurable quarterly milestones so you’ll be able to track your progress.

10. Seek out a Mentor for Gut Checks

A mentor doesn’t necessarily need to be someone at the height of their game. Great mentors could be small business owners who are simply farther along the path or who’ve expanded their businesses and can offer you insights. Mentors could also be successful business owners or vendors in other lines of business who understand the nature of small businesses and what it takes for effective management and growth. Find someone who can be a resource you could use for check-ins, which can prove invaluable as you make the leap into the following year.

The annual performance review looks a lot less intimidating when you’re designing it yourself. Have you done self-evaluations either for your small business or for yourself? We’d love to hear more about your experience.