Yearly Business Checkup – A Really Good Idea

If you are like most busy people, you tend to think you remember and act on more details than you do in fact. That alone is the best reason for doing an annual business checkup around this time of year. Here are some suggestions of items to consider carefully.

First, while I don’t expect everyone to do this, I suggest that, if you are running a serious business that produces the income you live on and depends, for example, on keeping long-standing employees who know what they are doing, then consider this. Create a real board of directors or other formal advisory body for the legal entity that holds the business. Many travel advisors today rely upon flexible legal forms like the LLC (Limited Liability Company), but the small group I am proposing can still be very helpful. I have seen it work well in my former law practice.

This body will include the legal owner(s) of the business who, at all times, will have complete control of decision. But it will also have an “outside director,” a person who ideally is not in the travel business, but has a lot of current business experience, sound judgment and an even temperament. The role of outside director is not to tell you what to do, but to provide an outside, independent perspective on important business decisions.

For example, an outside director who is familiar with local small business employment can contribute a lot to a business discussion about whether your agency is providing competitive benefits or insights into innovative practices in other sectors. If you’re considering expanding your business into new markets, an outside director can help test your assumptions and critique your research that supports the decision.

Second, an annual checkup should include a deep review of the business plan. Every important element of the plan that drives your profit should be examined. Was the target achieved? If not, why not? What needs to be done differently this next year? And so on.

Third, it is worth a moment to re-evaluate whether you have the right legal form of business for what you are doing. Has anything in the business changed that might impact this question?

Fourth, while this may seem silly to some, I have seen the consequences of not knowing where your key documents are located. I refer to the lease of space, if applicable, and your technology contracts. Are your state registrations and corporate-existence filings up to date in every state where they are necessary?

Fifth, is your E&O and other insurance still correctly set up for the business as it exists now, rather than how it was when you bought the insurance? Are the coverages appropriate and in sufficient amounts for the present scale of the business? If you have turned over the financial record keeping to an employee, do you have a fidelity bond to cover the ever-present risk that the person will cook the books for personal gain? That’s hard to imagine, but it happens more than you would think.

Finally, on my short list, review whether you are considering any business step in the coming year that could affect your cash needs. Are you moving more into tour operations, where you’re going to lay out your money in advance? Are you going to add technology that may require larger investments than in the past?

When you think you have adequately accounted for the near-future expectations, take the final important step of formally incorporating any necessary changes into the agency business plan. The plan will then be ready next year for another evaluation and update.