Friday, December 13, 2013

SOP Friday: End of Year SOPs

The calendar is always a good tool for helping you to manage your business. Some things are thrust upon us - like end of month, end of quarter, and end of year. The biggest of these is end of year for lots of reasons. It's the big financial cutoff for governments, taxes, and even laws that affect your company. It's also a convenient time to do lots of planning and "moving on" from the old to the new.

Here are a few items you should consider putting into your end-of-year checklist.

First: File Management

I talked last time about shredding. This is related to moving files from active to storage, and then from storage to long-term storage, and eventually to shredded.

But there are other things you need to do with files/paper printouts.

For example, we separate out packing slips and distributor invoices. We three-hole punch them and put them in binders for quick access. Our SOP is to do this as each order goes through the system. But at the end of the year we sometimes have to do a little catch-up.

These binders are invaluable three or four years down the road when our memories have faded and we need to know information about specific purchases. QuickBooks will have some detail, but the distributor invoice/packing slips sometimes have lots of details. Depending on the distributor, this might include serial numbers for server parts or even warranty information.

We also separate out all the files that are moving forward from this year to next year. Basically, this includes all contracts and on-going services. Everything that's "current" stays in the big file cabinet. Everything that's year-specific moves to a paper box. We might keep that box out for a couple of months. But eventually we stop accessing those files and the box moves to storage.

Second: Internal "Review" Tasks

There are several things here. You won't get them all done in the last two weeks of the year. But you should create tasks or service tickets for yourself. These things do need to be done once a year and this is a good time to do them.

Review Vendors - Have each person who deals with a vendor rate them on a few variables. For example, are they profitable, easy to work with, etc. I recommend a five point scale because it allows for a true "in the middle" vote and then a couple of options on both the high and low end.

Review Your Business Processes - How are you doing creating and following SOPs? What is awesome about your business? What sucks? What do you most want to change in the next year?

Review Your Marketing - What worked? What didn't? Review the budget you spent this year and set a budget for next year. In general, if your marketing is ineffective, you need to make a change. Begin figuring out what that might be.

Review Insurance Policies - Do you have all the insurance policies you need (fire, flood, errors and omissions, liability, etc.)? Do you have the right coverage for each of these? When was the last time you verified the beneficiaries for each of these policies.

And of course: Are you paying too much? Whether it's workers comp or liability, you should shop prices from time to time. Make sure the quality of coverage is the same, but lower prices if you can.

Update Your Corporate (or Partnership) Minutes - Are you required to keep certain legal documents? I know we sure are. Corporate minutes need to be up to date even if you're the only owner. Partnerships and LLCs have similar requirements.

Define and Execute Your End of Year Backup - Many cloud backup solutions actually keep a limited number of versions for each file and have a limited age for each file. Having only the "live" version is great, but you may also want to keep snapshots in time. The end of year is a great time to do this. If your backup is local, take a disc off site for permanent storage. If you backup is in the cloud, copy down a snapshot to hard drive for off site permanent storage.

Review Finances - You'll want to talk to your accountant about this. Make sure you run all the reports you need for cross-year comparisons. Make sure everything is up to spec for tax season. Do a best-guess estimate of where you stand with regard to income, profit, and taxes. Would it be useful to put some expenses into this year versus next year?

Third: Employee-Related Tasks

Update Non Disclosure Agreements - Each of your employees should have a signed non-disclosure agreement. Make sure those are all up to date. I like to keep them on in one nice file. Move old ones to the paper box for storage. Make sure all current employees have one.

Annual Performance Reviews - If you haven't done quarterly or six-month reviews, at least do an annual review. Give employees some feedback on how they're doing, and set some goals for the year ahead. If you're handing out bonuses or first of the year raises, this is a convenient way to do that.

Update Employee Information - You'll need it for W2s a few weeks anyway. And updated information is always good for the payroll folks anyway. Make sure you have correct address information, W4 forms, and some kind of memo that documents each employee's rate of pay. If you don't have an emergency contact form, that's probably a good idea as well.

Fourth: Client-Related Tasks

Review Client Contracts - This is also a great time to make sure you have a good copy of all current client contracts. Whether you put them all in one big folder or keep each in a per-client folder, make sure they're up to date. There's nothing worse than when a client asks a question about your contract and you can't find a copy.

Evaluate Your Clients - On several occasions I've recommended that you "Weed Your Client Garden" from time to time. That begins with evaluating your clients. You have to decide which criteria work best for you, but consider some of these:
- How profitable are they?
- How nice are they to work with?
- How interesting are their projects?
- Do they take your advice?
- Do they invest in good equipment?

Whatever criteria you choose, discuss them with a few key employees. If there's anyone you really should drop, you probably all know it already. In general, the discussion about what makes a good client is a great team building exercise for your company.

Christmas Gifts? - I recommend that you at least send out Christmas cards. This is a great time of year to touch base with your clients - especially your best clients. If you're small, touch base with everyone.

For many years we made baskets or ordered baskets for all of our clients. At some point we were too big for that to be practical. But I'm a real believer in doing something special for your favorite clients at least once a year. Anniversaries are a good time, and so is end-of-year.

Client EOY Checklist - All of your clients could use a few quick tune-ups. The goal here is just to make sure that these items are addressed no matter what. For example, even if you have password policies, I'll bet you have clients that haven't changed their password for a year.

Just create one or more service tickets to make sure you execute each of these at each client:

- Change Passwords. This includes your company password on their system as well as their administrator, and every user password.

- EOY Backup. At least once a year you should take a snapshot backup that goes off site forever.

- Technology Roadmap. Even if you can't execute it right away, schedule a client roadmap meeting. Even clients who resist this on a quarterly basis should be able to find a time in the next 365 days!

- Clean up disc space. This is a great time to do PC tune-ups on all machines. At a minimum, distribute information to your clients and ask them go clean up temporary files, prefetch files, and all that crap they know they stored "temporarily" on their computers over the last year.

- Clean up Outlook / Exchange. Again, either you can do this or you can give your clients a procedure for cleaning up old emails. This might include archiving off to PSTs. At a minimum it should include emptying their deleted items folder!

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You might have lots of other things you do at the end of the year. And, again, you don't have to freak out that can't get all this done by December 31st. The point of these lists to take care of some important tasks at least once a year.

Maintenance consists of taking care of things so that you diminish the number of problems you have over time. A lot of "little things" tend to go un-done throughout the year. The end of year process is simply intended to make sure that the little things get done.

Comments welcome.

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About this Series

SOP Friday - or Standard Operating System Friday - is a series dedicated to helping small computer consulting firms develop the right processes and procedures to create a successful and profitable consulting business.

Find out more about the series, and view the complete "table of contents" for SOP Friday at

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Next week's topic: Next Year's Holiday and Pay Schedule


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