For many industries, business may slow a bit around the holidays as employees use the last remaining hours of vacation time and clients do the same. It creates a quieter work environment and offers a chance for business owners to take stock of the past year, reflect on performance, and begin planning for the new year to come.
So while consumers are out shopping for holiday deals, many business owners may use the final days of the year to meet with financial advisors and tie up any loose ends before the year comes to a close.
Experts agree it’s important for business owners to schedule a “well visit” to review their financials before the end of the year. Most professionals already know December is a good time to make final charitable and retirement account contributions, but beyond those fiscally-responsible reminders, here are a few areas business owners should address before closing out 2015.
Take stock. While reviewing final numbers for the year, assess year-to-date results and compare them to results from previous years. Compare the performance of your business against competitors and the greater industry as a whole. Take the time to see which tactics, vendors and products worked and which ones didn’t.
Set goals. Discuss business goals for the coming year, and evaluate the potential for your business to reach those goals while visiting with an external financial advisor and your internal chief financial officer. It’s a good time to discuss what types of adjustments may be needed to reach those goals.
Evaluate ROI. Forbes recommends that business owners take time at the end of each year to assess the return on any investments made throughout the year, be it equipment, products or personnel. Check with staff to see how effective and how useful new software or equipment is and see how often those investments are being utilized.
Look for growth. See if 2016 would be a good time for your business to grow. Evaluate the state of your business and see if growth, be it personnel, affiliates or product lines, is possible without cash shortages.
Revisit pricing. The end of the year is a good time to analyze the market and see how your pricing compares to competitors within your industry. Should you need to increase pricing, the start of the new year offers an opportune time to alert clients to the adjustment.
Defer income. After consulting with your financial advisor or CFO, determine if it makes sense to defer some incoming revenue until after the first of the year. Choosing to defer to the new year delays the tax burden associated with that income.
Set up retirement. U.S. News and World Report recommends that business owners who are looking to establish a 401K savings plan for their employees do it before the end of the year. Some of the initial fees associated with set up may be tax deductible.
Before we know it, we will be ringing in a new year, and hopefully following some of these tips will leave you and your business well-positioned for a prosperous 2016.
(Editor’s Note: Rene Almazan is a senior vice president for Vantage West Credit Union, a $1.5 billion financial institution in Arizona, which serves a growing membership of nearly 135,000 via branches across Arizona and online channels, as well. Vantage West offers consumer and business banking services, and is federally insured by NCUA. www.vantagewest.org)