By Gerri Detweiler – Guest Contributor
The end of the year is often seen as a perfect time of year to reflect and plan for the year ahead. But the reality for most business owners is that it’s crazy busy and it may feel like all you can do to make it through.
Though you may not have a lot of time for quiet reflection, do your best to try to carve out some time so you can review where your business has been and where you want it to go in the new year.
Here we offer an end of year checklist focused on financial-related tasks to help your business wrap up your current year with confidence. Use what you learn to set goals and create an action plan for a successful year ahead.
You don’t have to check every single item off this list; pick the ones that are most important to your business and do what you can. Just keep in mind the tasks you least want to do may be the ones you really need to do first.
Marketing
Sales that lead to profits are the number one way you’ll build a financially successful business. So start by looking at how you’re generating sales. Remember, though, that revenues won’t equal profits unless your inflows (revenues) are greater than your outflows (expenses).
- Review your business planto make sure it is up to date and reflects your focus for the coming year. A business plan should be updated as market conditions change, and if there’s ever a time when conditions have changed this year is probably it!
- Review your marketing spending for the previous year to evaluate what worked and what didn’t. Not all types of marketing allow you to track specific results, but many do.
- Consider eliminating marketing expenses that are not providing a positive ROI (return on investment). Of course, there may be other reasons to invest marketing dollars, such as supporting your community, but if you’re spending a lot of money on a particular marketing or sales strategy and not seeing results, it may be time to cut your losses.
- Evaluate your budget to determine how much you can spend to test new marketing strategies and enter new markets. (In 2020 that was called “pivoting.”) There are more ways than ever to reach an audience, so consider placing small bets to find what works.
- Investigate exporting. If there is an international market for your goods or services you may benefit from expertise and even financing through SBA programs and resource partners.
Accounting
As they say, numbers don’t lie. Recognize that accounting isn’t important just for filing a tax return or making sure you pay the IRS or your state as little in taxes as possible. Whether you love working with numbers or hate it, what you learn by delving into the numbers will help you drive important decisions going forward.
- Most important: make sure your bookkeeping is up to date. If you do it yourself but are constantly behind it may be well worth hiring a bookkeeper to keep your financial records up to date. Each month and at the end of the year you’ll want to be able to “close the books”
- Determine if you want to continue using the same accounting software next year. (Quickbooks is very popular but there are many accounting software programssmall business owners can consider.)
- Review financial statements including your income statement, balance sheet, cash flow statement, and profit and loss statement. If the thought of this task makes your eyes glaze over, get help from your accounting pro or business mentor.
- Run an accounts receivable aging report and determine what actions you may need to take to encourage slow paying customers or clients to catch up on paying you. Discounts for early payments or penalties for slow payments can both be effective.
- Run an accounts payable report to determine whether your business is paying its obligations on time. Late repayments can hurt your business credit.
- Set up a consultation with your CPA or tax preparer to review your financial reports, save on income taxes, and to discuss ways to improve your business finances. Don’t wait to have this conversation until tax time when they will be overwhelmed.
Finances
Most business owners would rather be doing something else in their business besides financial tasks. Most would probably rather spend time creating new products, selling, or even completing work for customers. But if you don’t pay close attention to your finances you’re probably wasting money.
- Review the business credit cardsyou used this last year, and determine whether it’s time to shop around for a better deal.
- Review your pricing strategy and consider raising prices/rates.
- Critique your business bank statements like a lender would, looking at your average monthly revenues, low balance days and income sources, all of which may all impact your ability to qualify for small business financing.
- Evaluate your business bank account, including fees and benefits, to determine if it’s still the right fit. If you’re using a personal account for business, set up a business bank account.
- Review business expenses to identify costs you can eliminate. Remember to ask yourself what kind of ROI you are getting on those expenditures.
- Line up a line of creditif you don’t have one. Whether a crisis or opportunity comes along, you’ll be glad you have access to this essential type of short-term financing when you need it.
- Review your outstanding business loans to determine whether you can save money by refinancing business debt or through business debt consolidation.
- Shop for new financing you’ll need in 2022. Shopping for a loan before you desperately need the funds will allow you to make better decisions.
- Review contacts with vendors and suppliers; consider negotiating increased payment terms to improve cash flow. Or, when, possible tax advantage of prompt pay discounts.
- Check your business and personal credit reports. Credit will play a factor in many financing decisions and good credit may help your business save money on insurance or open up other business opportunities.
Insurance
After living through the crisis of the pandemic, natural disasters across the country, and increased reports of cyber ransom attacks, most business owners are well aware of the need for business insurance.
- Review your insurance coverage to make sure it still meets your business needs.
- Consider shopping insurance for cost savings.
- Discuss coverage with your insurance agent to eliminate coverage gaps.
- Explore insurance to help your business survive a cyber attack or data breach.
Finally, don’t forget to take time to recognize your accomplishments and those of your team. The fact that your business has survived this tumultuous year is reason enough to celebrate. Savor your successes and get ready for an even better year in 2022!
Gerri Detweiler is Education Director for Nav. Known as a financing and credit expert, she has been interviewed in more than 4000 news stories, and answered over 10,000 credit questions online.
This post was published first on Nav and is being republished with permission.