Many small businesses fail to attack some critical tasks before year-end. Nothing is more frustrating than maintaining the bookkeeping for a small business only to see it go unused before year-end. Too many small businesses use their bookkeeping as a means to filing their tax returns and that is all. The major problem is many small business owners don't know what a solid bookkeeping system can do besides taxes. Once a business owner is shown how their bookkeeping can be used as a business tool they see a lot more value in keeping it updated. Don't let a great bookkeeping system go to waste; here are six big picture items to attack before year-end.
Tax Review With CPA
A tax review with your CPA prior to year-end is definitely the most important item on this list, yet most business owners skip it. I think many business owners are either scared of their potential tax liability or they just don't care. In December many small businesses turn their focus to the holidays and the end of a year. Yet many small businesses don't even consider taxes until after the turn of the calendar. In my opinion that is a huge mistake. You can make many more tax advantageous moves prior to year-end rather than after. Also, if you are going to owe taxes wouldn't you prefer several months advance notice rather than being hit with a surprise a few weeks prior to the due date? One of the most important things you can do before year-end is to bring updated and reconciled books to your CPA a few weeks prior to the close of your fiscal year for a tax assessment.
Budgets & Forecasts
You need to set the following year's budget prior to year-end. Prepare a forecast based on your financial reporting. Then use that forecast to create a reasonable budget. Your financial forecast and budget should be set not only on your past financial activity, but also what you actually want to happen. So what if past financials predict certain sales and expense figures; set your budget at what you want to happen. Obviously your budget needs to be reasonable, but there is no harm is setting aggressive sales goals or cutting certain expenses. After you have created a reasonable forecast and budget for the upcoming year make sure to enter the information into your bookkeeping system. You should be running actual vs budget reports to monitor your progress. You will need to be adjusting constantly to keep your business on budget, but that is impossible if you are not updating your bookkeeping and monitoring your business finances.
You should always have a good hiring plan in place. Too many small businesses wait until they are overwhelmed with operations to find a new employee. This is a poor practice for several reasons. First, this method of hiring does not promote growth. If you wait until you are 100% full with operations then you have no time to prospect and sell. Secondly, if you are overwhelmed with operations there is a good chance your service will slip and your customers may become unhappy. Come up with a hiring plan based upon your financial forecast and budget. Understand what full capacity is and plan to hire when you are at 70%-80% capacity. This will promote growth and keep your business running smoothly. Hiring should be a calculated move, not a gut check.
You need to be planning out your marketing for the upcoming year before the new year hits. That way you hit the ground running with an actionable marketing plan. How are you going to attract new customers to your business this year? What are you going to do to keep up with new marketing trends and tactics? What will you do to continue to get lots of referrals to your business? What networking events will you attend or stop attending? I like to have a solid plan of what we will be doing from a marketing perspective and when we will be doing it. I have planned several new eBook concepts for next year and assigned them to various people to develop. We have analyzed the networking events that we regularly attend to make decisions on which groups have been effective. Like most other plans you need to be flexible as things are constantly changing; but it is nice to have a marketing plan to hold you and your employees to.
Becoming a thought leader in your industry is important. But how will you know if you are actually a thought leader? It's not like anyone is going to give you a certificate that says "Certified Thought Leader in Accounting." However, keeping up with industry trends and constantly challenging yourself to become an industry leader will give you authority and recognition. You need to be thinking about how you are going to differentiate yourself from the competition. What will you do differently this year to stand out? What will you do to maintain authority in your industry niche? Thought leadership is important and something you should always be striving for.
Do you have an exit plan for your business? Is it written down or just in your head? Many businesses do not have an exit plan in place. Entrepreneurs start businesses with a concept that they are excited about. They think about sales and growth but rarely the end goal. It is important to develop an exit plan and what your end result goals are. Without an exit plan how will you know what you are working towards? Like many other items on this list your exit plan will constantly be changing because your goals will change. You should develop an exit plan and revisit it at the end of each year to see if you need to refine it.
Make sure to think big prior to year-end. There are a lot of critical tasks that you should attend to every year before the calendar turns. A solid bookkeeping system that is updated regularly is the foundation of good year-end planning. Plan, measure, and refine.
What big picture items do you attend to at year-end?