Performance management is the ongoing work of setting expectations, addressing shortfalls, and recording both.
The expectation has to exist first
A standard nobody stated cannot be missed, and cannot be defended as having been missed. This is the same requirement as quality control: written down, so it is teachable and measurable.
Address it early and specifically
Most performance problems in a small business are tolerated for months and then addressed all at once, at which point the conversation is about accumulated frustration rather than about a fixable behaviour.
Specific is what makes it actionable. "Three callbacks this month on jobs you completed, against a team average of none" is something a person can respond to. "Your attitude" is not.
Distinguish the cause
Capability — they do not know how. The answer is training, and this is the most common cause.
Clarity — they did not know it was expected. The answer is the standard.
Tools — they cannot do it with what they have.
Will — they know, are able, and choose not to. Only this last one is a discipline problem, and it is the rarest of the four.
Treating a capability problem as a discipline problem loses people who could have been developed.
Documenting it
Written at the time, stating what was discussed, what was agreed, and by when.
Its purpose is twofold: the person has something concrete to work to, and if it eventually becomes a termination, the record shows a process was followed rather than reconstructed afterwards. See employment practices liability.
Reviews
An annual review is too infrequent to change anything. Its value is as a summary of conversations already had, not as the occasion on which someone first learns there was a problem.