It is important to take a look at where your small business is at the end of the year. These end – of – year tips for small businesses can help you make sure your small business is doing well as the New Year approaches.
Tips on the end of a small business
Aside from watching your business
First, take the time to look at your business closely at the end of the year, Michael Chaffin, senior vice president and national director of corporate sales, Fifth Third Bank recently spoke from Small Business Trends. This means that small business owners must stop making money long enough to take into account their business situation and the financial situation of the company at the end of the year.
"Business owners and entrepreneurs tend to go from year to year just by seeing how it all goes," Chaffin said. "They do not take the time to step back and look at the big picture."
If you have not already done so, block a little time on a schedule today.
Look at your margins
This is one of the biggest places to start. You need to look for places where your margins are tight, then dive deep to find out what's going on. The parameters you want to pay attention to are the level of gross profit and the level of net profit.
Salary costs and / or vendor prices are two of the things you should consider.
Having a meeting of the team
Bring key employees together at the end of the year. Depending on the size and nature of your small business, this team could include CPA's and lawyers.
"If you use consultants, you should have them come at the end of the year as well," says Chaffin.
Having this kind of team meeting is a great way to see what's going well on the operational side – and what's not.
Discuss with your suppliers
Looking at financials as revenue growth is explicit. To have a complete overview, you will also need to discuss with your suppliers. It is important to understand how these contracts affect the margins of your small businesses.
Discuss with them what they see on the horizon regarding cost and availability. Dig deep into the reasons for any price increase.
See estate planning
The end of the year is also a good time to celebrate small business owners. You could still be years away from retirement. However, it is always a good idea to look at plans for the sale of the business or the transition from property to family.
Begins now. These aspects take three to five years or sometimes longer to bring into play. Reaching out to your CPA is the first step.
Distribute your customer base
Chaffin says that it is especially important at the end of the year to make sure that you are not too focused on a client.
"It's always a challenge for small businesses," he says. Although these larger customers are generally very profitable, they pose a significant risk. If someone suddenly shares, your bottom line could plummet.
As tempting as it may seem to focus on one or two big customers, you have to remember that a diverse customer portfolio is healthy. Try to branch out a bit. For example, if you operate a restaurant serving the local plant, try to advertise with the local hospital.
Prepare for the coming year
It's also a good practice to remember that your small business is moving into another year. Looking at your financial health at the end of a year, you are preparing for the next.
Asking if you have the necessary staff and equipment for the beginning year is also necessary.
Here Chaffin suggests going out to one of these needs by having some credit in place. In this way, your small business will be able to finance the changes quickly at the beginning of a new year.
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