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5 Essential Tips for Small Businesses Heading into a New Year
A new year is a fresh start, offering you the chance to elevate your business to new heights. Through meticulous end-of-the-year planning, small business owners can anticipate challenges, embrace opportunities, and get a head start on positioning themselves for success. Your year-end analysis can help you identify opportunities for strategic financing, and QuickBridge can help you take advantage of them.
What is Year-End Planning?
Year-end planning for small business owners means strategically reviewing finances, setting goals, and preparing for the upcoming year. This planning phase includes tasks like financial assessments, budgeting, tax planning, and setting long-term and short-term goals.
Year-end planning can empower small business owners to:
- Evaluate their past efforts.
- Revisit their business plan.
- Set resolutions and determine changes for the coming year.
- Explore their strategies and options for achieving future goals.
Effective planning can have a powerful positive impact on your business. Here are five tips to help you get a head start:
Tip 1: Dig Deep into the Budget
Perform a year-end budget review: Your annual budget review is the first step in evaluating whether you’ve been successful in the past year and are positioned well moving forward. Analyzing expenses and revenue provides insights into profitability and overall fiscal health, offering a high-level view of your financial standing.
Use this time to:
• Figure out if you met last year’s spending goals.
• Identify if you made enough money to consider new growth strategies.
• Determine if you are spending more than expected in certain parts of your business.
• Assess areas where you are setting aside funds that aren’t being used.
Identify cost increases: The end of the year is an opportunity to analyze expected cost increases. For example, if your business involves vehicles, you may want to review projected oil costs and adjust your budget accordingly. You don’t need to do a deep statistical analysis. Instead, look at general trends to budget for anticipated challenges. Additionally, you can leverage last year’s expense data to identify spending trends and potential price increases for the upcoming year.
Anticipate cash inflows and outflows: As you analyze your budget, focus on identifying direct sources of income and expenses. Managing cash flow can be challenging for small businesses that depend on a limited client base. Analyzing your cash flow lets you get ahead of potential risk periods, so you can start strategically planning to ensure that you have enough capital to sustain all your goals.
Put everything together to get a feel for the year: A deep look into your budget gives you a retrospective view of the past year, enabling you to anticipate financial challenges and opportunities for the next 12 months. Essentially, your budget establishes the foundation for the entire year-end planning. Some elements to consider include:
- Cost barriers you may face for upcoming projects.
- Areas where you can cut costs and free funds for growth-oriented initiatives.
- Opportunities to adjust staffing strategies considering your available fiscal resources.
Tip 2: Research the Upcoming Year
December and January are busy months in terms of market research. Analysts and publications release reports summarizing the past year and forecasting future trends. If you work in a niche sector, you’ll want to focus on industry publications and trade organizations to get this kind of information. Mainstream sectors are analyzed by research organizations, including IBISWorld, IDC, Gartner, Forrester Research, and IHS Markit. Though formal industry analysis is expensive, especially for a small business, it can be valuable if you want to learn more about a specific issue before making a major business decision.
Apart from formal research reports, many analysis firms and trade bodies often share insights through blogs or webinars, specifically outlining upcoming trends. This type of content can help you:
- Understand how you fit within the rest of the market.
- Identify how prevalent different industry trends are becoming.
- Evaluate innovation opportunities for the coming year.
- Assess strategies your competitors are using to stand out in the market.
While larger economic studies can offer insights into broader trends, industry specific analyses are often more pertinent and valuable for local businesses.
Tip 3: Review Staffing Plans
The end of the year is a natural time to think about your staffing strategies. You’ve probably heard about the importance of getting workers engaged for years. Finding ways to put more resources into your staff can drive engagement and help you achieve your business goals. Allocate time during your year-end planning to determine how you can invest in your team. Notably, Gallup found that since 2020, there has been a 2% decrease in actively engaged employees due to the lack of growth opportunities.
It’s also a great time to take on HR tasks that may fall to the wayside, including:
- Employee reviews.
- Team-building events to build camaraderie.
- Recognizing top-performing workers.
- Updating employees on business goals and how they fit into your plans.
- Getting feedback from workers to learn how you can support them better.
- Identifying if there’s a need to hire new staff, if there’s room in the budget, or if you need alternative ways to staff up.
Tip 4: Consider Macro-Issues that Could Impact Your Business
We already mentioned the value of looking at big-picture economic research. It can be useful, but it has a limited role. Focus on specific economic issues affecting your business, such as election- related uncertainties or impending trade policy changes. Macroeconomic factors can significantly impact your year so always stay up to date with the most relevant information.
Some factors to explore on a yearly basis include:
• Changes in tax laws.
• New regulatory standards impacting your industry.
• Occupational safety and employee rights laws.
• State laws that have the potential to disrupt typical economic patterns.
A prime example of a macroeconomic issue is inflation. Inflation refers to the increase in prices of goods and services over time, leading to a decrease in the purchasing power of a currency. Inflation affects various aspects of an economy, impacting consumers, businesses, and policymakers. Inflation can cause businesses to face rising production costs, affecting profitability.
Tip 5: Revisit Your Business Plan
As your industry and financial situation changes, your core business models may also need to adapt. Embrace innovative service models or leverage new technology. Don’t think you have to cling to the status quo. Year-end planning is your opportunity to reassess your business plan and ensure it aligns with your current needs.
Take this opportunity to:
- List out your service models and determine if they’re all relevant or if anything is missing.
- Consider the value propositions you employ and if they are reaching your customers effectively.
- Explore pricing to make sure you find the sweet spot in generating revenue while offering value.
- Analyze your processes and consider updating them.
Planning for the coming year allows you to become proactive instead of reactive in running your business. This is especially valuable when you want to take on projects that may require funding. While online lenders offer quick access to capital, speed isn’t everything. You want any loan you pursue to align with your big-picture goals to give you as much value as possible. Leverage your year-end analysis to identify strategic financing opportunities, and QuickBridge can help you take advantage of them. We provide flexible, short-term loans that can be processed in just a few days. Plus, we take the time to get to know your business and align our financing to your specific needs. Don’t delay in setting your business up for success in the new year.