With the end of the year upon us, small business owners are busy tying up loose ends, getting budgets over the line and making sure their HR and finances are in a good place to start off the new year.
Here’s a simple 10-point checklist to make sure you haven’t missed anything as you prepare for year-end.
1. Clean up your balance sheet.
Businesses should be laser-focused on balancing their books at this time of year. Review assets and liabilities, collect on accounts receivables and pay your creditors. Having a clean balance sheet can make filing taxes or reviewing finances with lenders less stressful. Remember, it’s okay to have some debt, but your DTI ratio shouldn’t exceed 50%.
2. Get ready for Tax Day.
The IRS could be your most important customer in 2023. Make sure you know which tax forms you have to file, understand the deadlines, gather your records and identify any deductions and credits you can take advantage of.
3. Call a town hall meeting.
It’s important to communicate business plans to your employees. Set up a year-end town hall meeting to let staff know what you want to focus on for the coming year. This should include a two-way dialogue or Q&A session, where employees can also share their priorities and concerns.
4. Consider pay increases.
The end of the year often means employees will expect a pay raise. With inflation running at 40-year highs, the usual 3% to 5% cost of living increase may not seem like enough. It’s a tricky balancing act in a tight job market to retain and motivate employees while being financially prudent. Understanding local market conditions and deciding whether to use a merit-based or across-the-board approach will help in managing the process.
5. Launch a year-end sales push.
Whether it’s a final sales push, exclusive promotions, or getting new business and contract renewals over the line, the end of fiscal year sometimes necessitates a coordinated sales initiative. Whatever the avenue, be sure your sales efforts are concise, impactful and targeted. Offer a compelling proposition that provides value to the consumer but doesn’t crimp profits.
6. Review your insurance policies.
Insurance can be one of the most complicated areas for small businesses. Review your policies to determine if your coverage is consistent with your business operations. If you recently moved your business to the cloud, for example, consider whether you have the correct data coverage. Finding affordable health insurance is another challenge. Review any changes in your business operations and personnel with your broker so they can suggest and make the appropriate adjustments to your policies.
7. Boost cybersecurity.
Small businesses cannot afford to be complacent about cybersecurity and the end of the year marks a natural milestone to review how you’re protecting your infrastructure and data. To safeguard sensitive information, change all passwords related to your financial information and remind staff to change computer passwords. Review what access each member of your organization has to sensitive data and determine if changes are needed.
8. Prioritize a cash buffer.
Most experts say businesses should have three to six months of cash on hand to help fill potential revenue gaps. Having a cash buffer can help businesses react to surprise events like a pandemic shutdown, rising interest rates and recessions. If you don’t have a healthy rainy day fund set aside by the end of the year, map out a course to start building one in 2023.
9. Set goals for 2023.
It’s important to know where you want your business to go before you get there. Set goals now so you can hit your targets in the coming year. Make your goals realistic and achievable and be sure to follow through as the year progresses so you stay on track.
10. Invest in the future.
Investments today can set your business up for growth tomorrow. Whether it’s trainings, software or supplies, keeping up with innovation and having the right inventory balance is critical for a company’s long-term success.
The bottom line:
Balancing the books, preparing for tax season, double checking security plans and making smart investments are critical year-end strategies that set your business up for a prosperous future. It’s not too late to hit this 10-point checklist before the ball drops on 2022.