For many Americans, Labor Day marks the unofficial end of summer. Vacations are over, the new school year has begun, and lawns are needing less attention. The days are getting shorter, pumpkin pie everything is reappearing, and you and your small business can soon be caught up in a whirlwind of winter activities and preparations. Before you know it, it will be time to close the books for the year. If you want to start the new year strong, you can help make that happen by finishing the old year strong. Here are some tips to help you make the annual transition smoother.
Review Your Business Plan
There is an old saying that failing to plan is the same as planning to fail. If you were going to drive from Maine to California, wouldn't you want to know which highways to take, where you can find lodging, and what weather conditions you might encounter along the way? Your business plan can answer similar questions for your company. However, business plans aren't something that you just create and forget. They need to be reviewed and revised to help you keep your business traveling down the right road. Check to see how closely your business plan matches reality, then make any adjustments necessary. If you never got around to creating a business plan, it's never too late to remedy the situation. If you don't know where to start, check out this helpful guide from the Small Business Administration that includes advice, sample plans, and templates.
Take Care of Your Inventory
Whether you stock parts for your repair business, maintain an inventory of raw materials to manufacture your products, or purchase finished goods for resale, you probably have a significant amount of money invested in your inventory. If you've been conducting cycle counts throughout the year, you may be one step ahead. However, many entrepreneurs don't think about their inventory until it's time to close the year-end books. That's when they discover that they have products that have broken or otherwise rendered unsaleable, or that they have items that are simply not selling as well as they anticipated. There's an acronym for slow-moving, obsolete, out-of-spec inventory: SMOOSI. Take an inventory to identify your SMOOSI products, then work on getting rid of them now. Run a sale, write them off, or donate them to charity. If you want to delve deeper into the nuts and bolts of inventory management, click here to go to the appropriate chapter in the free, online version of "Principles of Accounting."
Review Your Accounts Receivable
Cash is the lifeblood of every small business, and you need to keep it flowing if you are to pay the expenses required to keep your business in business. Too often, entrepreneurs focus on sales without paying enough attention to actually collecting the money for them. Before you can start chasing after the money owed to you, you need to know where you stand.
1. Make sure all payments have been posted.
2. Run or create an accounts receivable aging report.
3. Identify the customers you need to contact.
4. Don't wait too long to begin pursuing payment; the older the invoice gets, the less likely it becomes that the customer will ever pay it.
5. Decide how gently you want to couch your first reminder.
6. Become firmer with each subsequent reminder.
7. Under certain circumstances, you might consider involving your business attorney.
Don't be so afraid of losing a customer that you aren't willing to pursue payment. A company can record sales of $1 billion, but it will likely end up going bankrupt if its customers do not pay for their purchases. We have an article on collecting money owed to you; click here to read it.
Take Care of Your Responsibilities as an Employer
Entrepreneurs often pay for help in one of two ways. Either they hire employees, in which case they must issue W-2s, or they hire contractors, in which case they must issue 1099s. Whether you or your accountant prepare the forms, it is essential to have correct, up-to-date information. Ask employees and contractors to verify their addresses, and ask employees to submit a new W-4 for the coming year. Make sure that you have paid and recorded all reimbursements to employees, including expense and tuition reimbursements. While you're at it, you might want to review our article on classifying employees. It's also a good time to show your employees how much you appreciate them. If your budget permits, you could host a party, hand out gift cards, or pay bonuses. Otherwise, thank them in an email, with a card or face-to-face, but make it sincere.
Get Your Marketing List in Order
You've probably built an email list by offering visitors to your website the chance to opt-in for newsletters, advance notices of sales, or discount coupons. However, if customers don't open your emails, there is little reason to send them. You need to identify inactive subscribers so that you can remove them from your marketing list. This article from Business News Daily provides some helpful advice for small businesses looking to build and manage their email lists.
Review Your Budget
Hopefully, you've been monitoring your budget throughout the year. If not, now is the time to take a good look at how closely your actual spending matches the amount you allocated for each category. This will give you a better idea of how to create a budget for the coming year. If you need help to create a budget, NerdWallet has an excellent guide to small-business budgets that walks you through the process in six easy steps.
Review Your Marketing Strategy
Your marketing strategy is a plan that integrates all the different methods you will use to drive sales. Your marketing plan may include a website, emails, texts, direct mail, social media accounts, radio spots, newspaper ads, flyers, television ads, door hangers, YouTube videos, job site signage, referral programs, or various other methods of engaging potential and current customers. Look back at the different techniques you've tried to see what worked and didn't work. Revise your marketing plan to avoid wasting money in the future. If you are interested in learning more about creating and revising a marketing plan, read this article that focuses on small businesses.
Back Up Your Computers and Mobile Phones
Modern businesses rely on data for virtually every aspect of their operations. Just imagine the challenges you would face if you lost the files containing your customer contacts, receivables, payroll records, payables, and other essential details. Hopefully, you have already been backing up your servers or computers on a regular basis. If you haven't, you should start doing so now. How often you need to back up your computer depends on how much your data increases on a daily or weekly basis. In other words, how much time do you want to spend to recreate the information lost since your last backup? Whether you use physical device or a cloud service to back up your data doesn't matter, but the method used and the storage location both need to be secure. Furthermore, although many business owners are aware of the need to back up their computers, some of them do not consider the importance of backing up their mobile phones. Think of all the texts and phone numbers that you have stored in your phone. If you lose or break your phone, where does that leave you? The method to use depends on whether you have an Android or an iPhone, but both incorporated tools you can use. You can learn more about backing up your mobile phone by clicking here.
Talk to Your Accountant
Communications between you and your accountant are always important, but it is imperative to have clear communications during the fourth quarter of the year. Your accountant needs to know your expectations, including the file formats you need and any custom reports that you want. You need to know what your accountant needs from you, how to provide it, and when you need to deliver it. Once you know exactly what you need to give your accountant, make sure that you come through. Your account may have different requirements, but these five items are typically of vital importance.
Show Your Customers Your Appreciation
Face it, your business would cease to exist without customers. People like to feel that their money is going to companies that appreciate their business and value them as customers. During the fourth quarter, many people get caught up in the holiday spirit, and they are often feeling grateful, charitable, and kind. Show them that you share their sentiments. You don't need to bust your budget to express your gratitude for their business. Sometimes, a simple email that sincerely expresses your appreciation is enough.
End your year strong. Don’t let the pumpkin latte distract you from your goals.