BY: Tara L. Grays
If you’re like most people, you likely had a bit of a chaotic end to the year, balancing ongoing business demands with increased personal obligations around the holidays. For as joyful a time as it most often is, it can be equally stressful. With the din of the holidays beginning to quiet and life resuming a semblance of normalcy, let’s take a look at what the New Year can mean for you and your business.
Hopefully, at some point in the fourth quarter, you found time to discuss year-end strategy with your banker and CPA (i.e., your team), and made some business decisions regarding your taxable income and any asset purchases that would have needed to occur in 2019. If you didn’t, don’t fret, but schedule that discussion early in the fourth quarter of this year. Now is the time to put together a strategic plan and outline your desired focus. Is this the year you expand your business, double your growth, or invest more in yourself and your employees? Here are some of the ways your banker can help:
If you want to expand your business, you obviously need to make sure you have the cash to do so. Does this mean purchasing a new location or growing operations at your current address? If so, your banker may be able to help you find a way to finance that purchase or increase your line of credit for the additional contracts you are looking to secure. Financing is not a one-size-fits-all solution, and bringing your banker into your planning early can help you find a package that best fits your needs.
It never hurts to make more money, right?! When was the last time you took a hard look at your expenses? Consider each line item and ask yourself, “Is this expense bringing in additional customers/sales, of helping me to retain existing customers?” If the answer is no, can you – and more importantly, your business – do without that expense, or perhaps do with less of it? Excising all of your expenses isn’t feasible, but any opportunity you might have to trim things down will translate to more cash flow that you can reinvest in your company – or go straight to your bottom line.
What about the flip side, conducting a thorough review look of your sales? When was the last time you increased your prices (even by a little bit)? You are more of an expert in your field now than you were on day one. If the market allows for it, charge for your expertise.
And how about the way you operate your entity and file taxes? Maybe you’ve been an LLC for the last 10 years … is that how you should still be operating? If you did not have this very important conversation with your CPA in 2019, definitely have it now. You might be better off filing your taxes as an S corporation or becoming incorporated.
Yes, you do actually get to set goals for yourself, and not just your business (gasp!). Do you want to invest more in yourself (or your employees) this year? Offer leadership training or plan a retreat? If any of these things have been on wish list, have this be the year that you sit down and make them happen. Determine what the investment is going to be (a certain class you have been wanting to take, a business retreat with ideas that you think would be beneficial to bring back to your company/employees, changes you have been wanting to implement), what the related cost(s) will be, and what you can budget for the year. If you cannot cut down on existing expenses, look to see if you can move funds from another area of the business to make this happen. Remember that reinvesting in yourself is reinvesting in your company.
Maybe you’re planning to retire in the next five to 10 years? What does that process look like to you – gradually pulling away, or selling your company more quickly? Depending on what the optimal transition to your non-working years looks like, having a succession plan in place sooner rather than later is most beneficial. The most valued companies are the ones that can operate even if you/the owner are not there to handle every minute detail. Train your employees on how to make important business decisions (yikes!), make sure your sales are recurring and you are retaining clients, and position your company to take on the headwinds of your industry.
The start of a new year is chance to start fresh, to reflect on your accomplishments, and to look forward to tackling new challenges. For the latter, setting goals and defining a strategic plan to accomplish them is an integral first step in that process. The only one standing in your way is you!