3 core areas every small business owner should review before the new year

December 10, 2018
3 core areas every small business owner should review before the new year

For some sectors, December is a slow month. If you have the luxury of slowing the pace or closing shop for midwinter break, take the opportunity for a year-end mini-retreat where you evaluate how things in 2018 went. This exercise can help identify what’s on track for your venture, or what went off the rails, so you can set yourself up for a stellar 2019.

How’s your cash flow?

The core question you want to get at is profitability. If things are profitable, great! If your financial sheets tell a different story — your balance sheet, cash flow and income statement — it’s time to dig deep to find just what it is that’s getting in your way.  

An important part of this review is crunching the numbers to unearth the money wasters. For example, end of year is an opportune time to review agreements with vendors and suppliers. Gather the paperwork, and do a quick accounting to find out if the true costs actually line up with their promises. If needed, flag the agreements in need of a 2019 review, so you can negotiate better prices or shop around for a better deal.

It’s also important to check your pipeline, and how your products, services and individual clients are helping your venture thrive. Do prices rest below their true value? Is your billing system inefficient? Worse, are some services provided to clients actually costing you money? Finding answers to these questions can give you the blueprint for next year.

Is marketing on target?

One important area that can use some examination is your marketing. If you’re wearing many hats, it’s difficult to find time and energy to focus on these things. First, brainstorm a list of the things you did to connect with your customers. In addition to good, old-fashioned advertising, this list can include social media, networking events, trade shows, email lists and website content. If you handed out goodie bags at the county fair, that counts, too!

Then, define your measure of success for these efforts. Some marketing is designed just to pique interest, while other aspects are for increasing sales. Gather as much data as you can — sales, revenue, foot traffic and online metrics — so you can use some high-quality measurables. You may discover that trade article you posted on social media led to an uptick in web visits and leads. Or maybe the last three target marketing mailings generated less traffic. Use these measurements to help guide next year’s plan.

Are you ready for tax time?

Finally, while many business owners are looking forward to a tax break in 2019, now’s the time for one last look at any end-of-year purchases you can complete before Dec. 31, so you can claim that expense this spring. One thing to keep in mind: With interest rate hikes in the 2019 forecast, there may be no cost benefit to waiting.

Since you’ll be reviewing some of the same documents you’ll later hand off to your accountant, such as your financial sheets, finishing your tax prep is a good way to wrap up your retreat. However, if you’ve been using the shoebox method of keeping track of certain business expenses, now is the time to get organized before tax time. While you’re at it, you should devise a better system for 2019 to keep an up-to-the-minute tracking system.

Improving your cash flow in 2019 can make your business run better. Learn how Minnwest Bank can help you streamline your accounts and payables so you have time to get more done, and then contact one of our bankers today.