How to Prepare Your Small Business for the New Year

It really seems like every year goes faster than the one before it. Time is precious, but it’s important to take some time to ask questions and think hard about how to improve your business. The new year lies ahead but there’s still time to make big changes.

By reviewing last year’s finances, cleaning up current finances, and planning revenue goals, you’re well on your way to helping your business excel in the new year.

Reviewing Your Finances

One good way to review how your finances are doing this year is by reviewing your latest quarter. This business review is your chance to see how things are going and gives you time to strategize for the new year. After reviewing your business performance, total revenues, expenses, and tax estimations, you can take steps to shore up the company’s overall financial condition in preparation for the end of the year.

Here are three areas to focus on when reviewing your finances.

Tax Planning: The third quarter is a great time to meet with your accountant for an overall “big picture” review of your business performance and tax expectations. It will be helpful to know how much you have paid in estimated taxes so far for the current year and if you can expect to owe more money or receive a refund.

Profits and Opportunities: In addition to taxes, your third quarter business review should take a closer look at the operations and strategy behind your business. You’ll want to determine if you made more money than last year, which products are underperforming, where your highest business expenses are coming from, and identify any missed opportunities.  

Big Goals: The third quarter review is also a chance to take a step back and look at the overall direction of your business. This is your time to do some visionary thinking and dreaming. It’s a great moment to examine your priorities and figure out how you can redirect your energy and resources to spend more time where it is needed. Ultimately, you should use this step to envision where you want your business to go.

Cleaning Up Your Finances

Many business owners find that kicking off the new year with a clean slate helps them focus on their fiscal goals for the year ahead. Whether it’s addressing errors or making sure that client accounts are in good shape, taking an afternoon to clear the financial decks is an investment well worth making.

Here are some steps to guide you through cleaning up your finances for the year ahead.

Fix Accounting Mistakes: Start the year off by closing out the books from last year. Review your accounting to ensure that everything has been accurately reported. Look for common errors such as missed invoices, missed payments, incorrect amounts, and expenses assigned to the wrong category,

Evaluate Customer Accounts and Terms: The credit terms that you extend to your customers determine your cash flow. Credit terms refer to the amount of time from a transaction to when payment is due. The more generous your credit terms, the more likely it is to impact your cash flow. Review the past year’s performance through that lens. You’ll also want to write off any bad accounts. Unfortunately, some customers don’t pay their invoices and you’re stuck with the bill. Once an account has been deemed uncollectable, small businesses can reverse credits to Accounts Receivable for the amount unpaid.

Get Ahead of Next Year’s Taxes: After you’ve reviewed your taxes from last year, talk to your accountant about any steps you can take in the year ahead to plan more proactively. Pull together all your expense receipts and income documents to make it easier to file your returns and send those to your accountant as early as possible to avoid the rush.

Determine Available Credit vs. Upcoming Needs:  It’s important to think about your finances through the lens of what your credit needs are. You need to know if you can bridge cash flow gaps, make an investment in equipment or marketing, or hire new staff.  Determine your needs in advance so that credit will be available when the time comes. This could mean reaching out to alternative lenders, like Omni Capital, to ensure you’ll have capital or a business line of credit when you need it most.

Decrease Overhead Expenses: You determine the success of your small business from the talent you hire, the technology you implement and the direction of your company culture. Some of the most efficient ways to decrease your overhead and improve your budget are investing in the right software, working with outsourced talent, cutting phone bills with more online communication, and operating in an area where office/retail space is less expensive.

Cleaning up your finances is time well spent; you’ll have a good grasp on your financial picture and a solid foundation for your goals and objectives in the year ahead.

Plan Your Revenue Goals

Small business owners who wait until January to plan for the upcoming year often end up finding themselves already behind. The reality is a successful year in business starts before the clock strikes midnight on New Year’s Eve.

Here are some of the best ways to make the most of forward business planning.

Focus on the Data: We live in a data-driven culture and companies can use the data they gather to keep improving their business. This could be as simple as conducting a survey and then using that data to create new offerings that meet the needs of your market. By using data when you plan for a new year, you take the guessing game out of running a successful business. Instead, you prioritize facts and use them to create your business goals for the year.

Assess the Risks: An important part of business planning is risk assessment. Take the time to play out any obstacles that could potentially get in the way of achieving your goals for the year. Knowing what can potentially go wrong is the only way business owners can create solutions and alternatives ahead of time. Otherwise, you run the risk of having your plans derailed by surprise complications.

Break from Unsuccessful Habits: To continue expanding your business, it’s important that you recognize what worked and what didn’t. Something may have been a great idea in principle but did not work in practice. Continuing bad practices will only cancel out the planning you have done to improve your business.

Reviewing last year’s finances, cleaning up current finances, and planning revenue goals is the best way to prepare your small business for everything to come. By taking the time now and using these helpful tips, you can create a solid plan for next year.

If you find that your business needs additional cash or credit, do not hesitate to reach out to Omni Capital. We provide small businesses with flexible funds, easy-to-understand immediate working capital opportunities and great customer service. Apply today and receive funding in as little as 24-48 hours!