Small businesses should go through an audit process from time to time so that they can take the pulse of their progress. They must be official and thoroughly executed to identify the state, management quality, and financial status of the company. Bellow we’ll go through a quick audit checklist to guide your business towards your initial goals and plans.
1. Human Resources Management
The primary source of power for your small business is your team. Your employees have the responsibility to carry out the main duties you delegated to them the moment they entered your company. Therefore an accurate assessment includes investigations of your personnel and their work procedures.
There should be an evaluation method for each of your departments, starting with team leaders and ending with interns. It is your responsibility to inform employees of your expectations with clear and concise details. Once they have enough time to implement your instructions and training, your staff is ready for your evaluation. The supervisors should prove their ability to oversee the operations and handle issues and delicate situations with professionalism and determination.
The audit of your employees will reflect the work performance and the company culture that leads them towards certain values and goals. Once the assessment ends, you should be able to understand if there is a need for any personnel changes. These include hiring new members, laying off old members or granting promotions to deserving members.
2. Company Plan
Each company, no matter how small it is, should have a concrete set of rules that will offer the organization a solid backbone. An audit can include business plan reassessments. It’s a guiding mission without which chaos will intervene in the daily activities.
The company plan usually determines the target market, characteristics of the customers, distinctive features that set it apart from its competition, specific and measurable objectives. It will also identify potential opportunities where your sales, production, and marketing teams should focus in the first place. An audit in this sector will tell you what changes you should apply so that your company adapts to the newest internet and business trends and suffers next to no impact after each industry alteration. A great head start would come with having supersonic internet speed and seamless user experience for your website.
3. Financial System
In an ideal small business, there should be an independent public accountant who manages the books every year. This kind of audit will evaluate financial documents and statements. Moreover, it will examine the effectiveness of the procedures that together create the accounting system. This should limit the funds for internal management, production, and marketing tasks, as well as those for taxes and other external payments.
The accounting system should also keep the way you manage your small business finance in control. You should pay attention to how you make sure that employees are paid on time, and respect all laws and regulations regarding payroll deductions and issued invoices.
The result of the financial audit will determine to what extent your accounting system is relevant for the present performance of your small business. It will also determine if finances will be able to keep up with the future growth of the company.
4. Operational Oversight
The operational audit evaluates the efficiency of daily internal procedures that keep the company running, namely production, sales, and marketing. This time, you have to gather data about the relationships of your business with the suppliers and vendors. This also includes indicating alternative solutions if in case the suppliers end their contract with you.
You should also check the state of the equipment and its maintenance process so that it is entirely functional to deliver the products in top condition. Safety protocols are another key element in your operational audit. The workers and products should enjoy protection from the surrounding environment.
After the operational audit, you should have a clear picture of how the company stands with its internal procedures and potential improvement opportunities. The collected data should tell you how to streamline the workflow to come up with faster production and sales, and a better financial management in the department.
5. Self Audit
In the case of small businesses, it is common to see the management getting too involved in the workflow of the entire company. Therefore the founders themselves should go through a periodical audit to assess their own performance and identify their potential points of improvement.
A small business owner should keep one eye on internal activities and the other on outside industry changes that can affect their operations. Consequently, the audit can evaluate the capacity of the owner to stay up to date with business world through reading relevant and trusted publications and attending seminars and professional events.
The report of the audit should offer an objective record of managerial and leading skills of the small business owner. Based on these, it is easy to identify where the founder should redirect its focus during the following months. For example, if the company has attained its maximum capacity of production and sales, then the founder can invest energy and resources in finding new ways to expand the business.
So, these five stages round up the audit checklist for small businesses. Unfortunately, many people underestimate the valuable insights that a company evaluation can offer them. Based on the results of this audit, you will have a clear picture of where your company stands and where it can be in the following months.
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Michelle Baker
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- Small Business Audit Checklist - January 3, 2017