Now that 2016 is in the books (no pun intended!), every small business owner needs to take a step back, analyze what happened, and start planning for the future. The first question that needs to be answered immediately is am I prepared for 2017? That’s not such an easy question.
Here are some tips that will help point you in the right direction to answering this question:
- If you haven’t been reconciling your books on a consistent basis, then first things first, call your CPA. Have he or she perform a year-end close out of the books. If possible request a year over year comparison so you can see the progress you have made. If you were reconciling your books on a consistent basis then it may make sense to request monthly reports and comparisons.
- In addition to the financial statements, ask your CPA to calculate your 4th quarter estimated tax liability and have him or her provide you with an estimate of your total exposure when you file your taxes in April. In addition, quarterly and annual payroll taxes including 1099s and W-2s are due in January. Taking care of all of these items upfront will decrease headaches and allow you to budget for tax payments in the near term.
- Determine key financial ratios and metrics that are relevant to your industry. You or your CPA should calculate them based on your financial statements. Take these calculations and look for trends and also compare them to industry standards. This will help supplement the story your financials are telling you.
- Create your 2017 revenue forecast and expense budget. Check out my last article for more detail.
- Review all of the major decisions you made for your business over the past year. Scrutinize the decisions as if you were a third party analyzing what you did. To get started, ask yourself “Would I make this same decision again?”.
- Review all of the goals you set last year. Did you meet these goals? If not, where did you fall short. It’s important to look not only your business goals but also your personal goals as well. Now, set short-term, medium-term and long term goals that are achievable moving forward. From there, create and implement your plan to set yourself in motion.
- Revisit your business strategy/plan you created. Are you following the outline you created or have you deviated? What needs to be altered for growth?
- Last but not least, create a plan to hold yourself (and others, if you have partners in your business) accountable.
Most small business owners don’t take out any time from their schedules to perform this type of analysis. Running a successful business is more than just doing what it takes to get the job done. To ultimately grow your business you need to understand the past and where you are headed in the future.
Make it your business’s New Years resolution in 2017 to invest in your business’s long-term growth plans. A big first step in this is to set some time aside immediately to go through the above steps. Then, go into your busy calendar and block on some time every month or quarter to revisit what you learned from the current analysis. Every minute you spend on this will be time well spent, I can guarantee it.
As always feel free to contact me with any questions or comments!
