Learn from Last Year and Be Strategic About The Upcoming Year
Set aside some time before year end to reflect on the successes and obstacles from last year. Then identify what goals you have for the upcoming year. Once you have established those goals you will then need to develop a strategy and tactical plan to help you be successful towards achieve those goals.
This means small business owners need to stop focusing on making money long enough to take account of where their business stands and where it’s going financially as the year draws to a close. A lot of times business owners and entrepreneurs tend to go from year to year without laying out an overall strategy. They need to take time and step back from the day to day operations and look at the big picture.
Look at Your Margins
This is one of the best places to start. You need to look for the places where your margins are being squeezed and then dive in deep to find out what’s going on. The metrics you want to pay attention to here are the gross profit level and the net profit level. Employee costs and/or vendor prices are two of the common points you should review.
Have a Team Meeting
Bring key employees and business advisors together as the year winds down. Depending on the size and nature of your small business, that team could include Financial Consultants, CPAs, Marketing Experts, and Lawyers. Having this kind of team meeting is a great way to look at what’s going well operationally — and what’s not.
Talk with Your Suppliers
Looking at the financials like revenue growth is self explanatory. To get a really complete overview, you’ll need to chat with your suppliers too. Understanding how these contracts are impacting your small businesses’ margins is important. Talk with them about what they see on the horizon as far as cost and availability go. Dig deep into the reasons behind any price increases.
Look at Estate Planning
The end of the year is also a great time to look forward for small business owners. You might still be years away from retirement. However, it’s always a good idea to look at plans for selling the business or transitioning off ownership to family. Start now. These aspects take three to five years or sometimes longer to put into play. Reaching out to your Financial Advisors is the first step.
Spread Out Your Client Base
It is especially important at year’s end to make sure you haven’t concentrated too much on one client. That’s always a challenging item for smaller businesses. Although those larger clients are usually quite profitable, they present a big risk. If one suddenly leaves, your bottom line could tumble. As tempting as it might seem to concentrate on one or two big clients, you need to remember a diverse client portfolio is a healthy one. Try branching out a little and look for opportunities to expand.
Prepare for the Year Ahead
It’s also a good practice to remember your small business is moving into another year. Looking at your financial health at the close of one year means preparing for the upcoming one. Asking whether you have the staff and equipment needed for the year that’s about to start is necessary. Work with your Financial Consultants to suggests how to get out in front of any of these needs by understanding how you will finance future growth. That way, your small business will be able to fund the changes quickly as a new year starts.
If you are looking for a Financial Consultant that can work with you to develop a strong strategy for next year - contact Stephen Westurn (214.240.0701) or Stephen@Westurnconsulting.com for a complimentary session.