In the final stretch of 2018, small business owners should follow these steps to end their year on a high note.
As the year reaches an end, it’s important for small business owners to finish strong and begin to lay a solid foundation for the year to come.
NFIB members Bill Larson, financial advisor at Larson Financial Group, and Dewey Martin, CPA and Director of the School of Accounting at Husson University, Bangor, Maine, offer steps owners can take to close out the year and be prepared for next year:
Change your mindset
Larson says most small business owners are consumed by operational tasks from the day to day of their business, such as equipment needs and staff training. But at the end of the year, you need to consider the long-term for your business to survive and thrive.
“Meet with your key people at an off-site location away from the business” Larson says. “Maybe talk to some key customers and ask how the company has done this year and what they would suggest for the coming year.”
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Examine your work
Once you’ve gotten feedback from your staff and key customers, it’s time to look at what you have or have not accomplished in the current year. There are many questions you need to ask yourself about how your business is performing and how you want it to perform moving forward.
“You’re either coming in under or over,” Larson says. “It’s never exactly what you planned for your revenues or your expenses. It’s really time in the fourth quarter to get into the specifics.”
Sit down with your accountant. Specifically, Larson suggests looking at your business’s cash flow projections for the first three quarters of the year. As you review, ask yourself some of the following questions: Have we completed ¾ of the business we planned? Is there a reason we’re over or under?
Ask yourself similar questions regarding your expenses to get an understanding of your year-end finances.
Once you’ve answered those questions, you should now identify, address, and review what needs to be corrected before the end of the year. If there is time, work to fix those issues now rather than later. For example, one way to get ahead for the upcoming year, if you have the cash flow for it, is to consider buying equipment for the new year in the current year.
“I usually say that if you need a particular piece of equipment that you’ll need to buy in the first six months of next year, then you should consider buying it this year and accelerate the tax deduction into this year,” Martin says.
Another way to potentially save money in the new year is by increasing your charitable contributions now, says Martin. This can increase your charitable deductions when it comes time to do your taxes.
Make a plan and write it down
Once you have a clear picture of where your business is financially, it’s time to set some goals for the coming year.
A good example would be employee compensation. Think of employee bonus and compensation goals for next year. “This the quarter to look at those goals…particularly with the tightening labor market,” Larson says. “It’s extremely important to keep employees in today’s market because there are more jobs than people to fill them.”
Most importantly, make sure long-term plans are written down somewhere. Larson says, “If some strategies and tactics are written down, the likelihood of them being accomplished, tried, or partially accomplished just explodes to the positive.”
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