As we head into the last two months of the year, it’s the perfect time for local businesses to conduct a review of their 2016 finances and begin planning for increased success in 2017. Not sure where to start? Here’s a list of go-to tips from experts to help guide your end-of-the-year financial planning.
- Get caught up on your bookkeeping before the end of the year.
It’s impossible to conduct accurate or productive financial or tax planning for the future if you don’t have a clear picture of where things currently stand. That means knowing exactly how much your business took in in 2016, as well as what you’ve spent year-to-date. It’s best to work with a CPA when undertaking this review, as the guidance of a professional is priceless when it comes to complicated finance and tax issues. However, if you choose not to work with an accountant, there are a plethora of apps available to help automate some of the work for you. Many of these apps are even free! (Check out FreshBooks’ expense tracking, as just one example.)
Reviewing your year-to-date results, and how they compare with the previous year, will help you make an effective action plan for the upcoming year. Plus, if you are able to gain a solid understanding of both your revenue and expenses by the end of 2016, you will have a much easier time when tax season rolls around in 2017.
- Ensure that your commercial insurance protections are current and match your needs.
Use this period at the end of the year to review and, if necessary, reevaluate the commercial coverage your business truly requires. Ask yourself if your current plan is sufficient for your needs. If your business has either grown or downsized in 2016, it’s quite likely that your policy needs have also changed.
- Research current key performance indicators (KPIs) within your industry.
Due to the very nature of operating a fast-paced small business, many local business owners forget to remain up-to-date about important changes and evolutions within their industries. Use the November and December planning months to identify and learn more about KPIs for your industry, and set up a way to begin tracking those for your business throughout 2017. This will ensure you remain current and competitive within your field!
- Revisit your pricing.
During end-of-year planning, it’s vital to be certain that you’re being honest with yourself about how well, or not well, things are going. Is your current business model truly sustainable? Do you and your team feel like you’re working really hard, but yet still remaining stagnant? Too often, small business owners make the mistake of undercharging their clients because they have failed to adjust their pricing model over the years.
Before heading into 2017, conduct a review and ask yourself if your pricing is actually compensating you adequately based on your time, product or service, experience, and costs. If it’s not, the start of a new year is a logical time to implement changes in pricing.
- Take a hard, honest look at your recent investments.
This can be a topic that people naturally shy away from, as it can be difficult to admit and own up to investments you made during the year that may not have turned out so well. Make sure you take the time to closely examine whether you are actually getting the return on investment you expected to from employees hired in 2016, as well as from recently purchased equipment and/or recently added business lines. If you are not, it is a good idea to plan on making adjustments for 2017.
- Close any inactive businesses.
This one comes up more than anyone would expect! Small business owners often start a couple of small enterprises before finding out which one truly works for them. If you haven’t done any business through an enterprise you owned in 2016, and you have not bothered to close the business, it’s very possible that government agencies still think that your business is active. That means they’ll be expecting your tax return, annual fees, etc. To avoid this, be sure to officially close any inactive businesses! This is especially true if you formed an LLC, or filed for a reseller’s license (or another kind of permit).
- Don’t forget to set new goals!
It’s vital to set new goals and budgets each year. Don’t make the mistake of waiting until Q1 to do this! Evaluate and write out your 2017 business goals and plans now (this doesn’t mean items can’t be slightly adjusted if things change throughout the year). Create budgets now if your fiscal year starts with the calendar year. And be sure to schedule regular 2017 visits with your financial advisor to keep you on track for the upcoming year.