Like all good business owners, you started the year with a solid plan. But is your plan still as solid as you thought it was, or are there areas that could use shoring up? Here are some revisions to consider as the year winds down.
Look for Over- and Underperformers in Sales
This is the area that offers the greatest potential for improving your bottom line. It is also one of the easiest to analyze. Basically, all you have to do is review your year-to-date sales figures to see if you can root out both winners and losers — products or services that performed better than anticipated, as well as “dogs” that yielded disappointing results. (Here’s where budgeting, forecasting and ongoing analysis of your finances can be invaluable.)
With those figures in hand, it’s a simple matter of applying a little common sense. Increase your inventory and/or marketing efforts on whatever is performing well and sell off the underperforming products at a deep discount to generate cash. In the case of a costly or time-consuming service that isn’t generating a sufficient return, you can simply discontinue it — be careful to honor any commitments you have already entered into, of course.
Make the Tax Laws Work for You
If you’ve had a lean year in sales, or generated higher expenses than anticipated — or both — your instinct might be to defer any substantial investment in new equipment or infrastructure until next year. Not spending money just seems like the sensible, financially conservative thing to do.
But it’s not always that simple. Major purchases could reduce your tax liability this year. And if those investments can breathe new life into your business as the calendar turns, the combination of reduced tax liability this year and increased revenue next year could be your best financial bet. The only way to know for sure is to maintain accurate, up-to-date records. As our colleague Charl Riggs has noted, a good bookkeeping services provider “can help you interpret your business' financial vital signs and use them as a basis for budget forecasting and strategic planning.” Beyond that, there are many other practical reasons for staying on top of your tax records all year long.
Don’t Miss Your Exit
How long do you plan to keep your company going? A surprising number of business owners don’t have an answer to that question. Often they’re so caught up in trying to keep their business on the rails (or, for the luckier ones, trying to keep up with a runaway train) that they never stop to consider when and where they might want to get off.
Right now, while you’re reviewing the ups and downs of your year so far, would be a good time to also put some thought into your eventual exit strategy. Selling a business can take years. So, just as you should maintain your house so that it retains its value, you should operate your business with an eye toward acquiring the best possible price when the time comes.In the meantime, stop procrastinating! Take a deep breath, get your second wind and try to make the most of Q4.