If you do not take control of your business, it will take control of you. With that thought in mind, we recommend the following five tasks to help you take control of your business, finish the year strong, and make sure you are positioned for a healthy 2009: Plan for Tax, Plan for 2009, Collect Your Receivables, Fortify Your Banking Relationships, and Improve Your Web Presence.
PLAN FOR TAX
Business Owners have the most complex tax issues, but they also have the most tax-saving opportunities available. Every business owner should meet with their tax CPA BEFORE the year is over. Our experience shows that although this may cost a little bit of money, it usually comes back at least ten-fold in the form of tax-savings. We find that if these meetings are run properly, our clients usually save thousands if not tens of thousands of dollars in tax.
Here is how you make the meeting efficient and profitable. Schedule the time with your tax CPA at least 1-week in advance. At least three days before the meeting, send your tax CPA all the information they will need to estimate where you will be at the end of the year. This includes financial statements from the business through October or November (cash or accrual based on how you file) and a description of anything major that has changed during 2008. We also recommend you include an agenda of all of the items you would like to discuss as well as strategies you have heard about that you might like to explore. During the meeting, follow the agenda and document the decisions you make; then implement everything before the year is over.
PLAN FOR 2009
If you are a business owner who escapes planning for each new year with an excuse like: “I don’t know what will happen next year, so there is no need to plan for it,” then we offer you a different perspective. If you diligently plan for each new, then perhaps you can pick up something to improve your current process.
You need to start by reviewing your 2008 budget, if you had one, and how you performed relative to that budget. Which assumptions remain valid, and which need to be revised? Plug your old, new, and revised assumptions into your income statement and balance sheet projections for 2009. What sales do you expect and how do they need to be adjusted for season trends in your industry? Are your variable costs increasing or decreasing from you own price reductions or increased labor, material, and other costs? What fixed costs will remain the same in 2008, and which will change? Why? How will your current, debt-to-equity, days sales outstanding, working capital, and other key rations change throughout the year?
Once all of this is put on paper, two things will occur. First, you will clearly see if you like or do not like how 2009 is shaping up and you can make changes to your operations to enhance or make more realistic the results. Second, monthly budget versus actual reporting with a focus on the gross variances (more than 5-10%) will allow you to make adjustments during the year more quickly and effectively.
COLLECT YOUR RECEIVABLES
Most businesses struggle to collect between Thanksgiving and New Year’s Day. This does not have to be you. Review your list of receivables every few days between now and the end of the year. Your customers’ accounting staffs will take time off. Find out when that is and make sure they pay you before they leave on vacation. Track the promises they make and politely and professionally hold them accountable to those commitments.
FORTIFY YOUR BANKING RELATIONSHIPS
Your banker has had a tough year. You might want to consider taking your banker to lunch before the year is over to renew your relationship and find out how you can better become one of the bank’s favorite customers. If the bank has lent you money, make sure you are compliant with all of the loan covenants. With the credit markets still quite a ways away from stabilizing, your bank may become one of your most critical assets, if it isn’t already.
IMPROVE YOUR WEB PRESENCE
It does not matter the industry in which you operate. It is irrelevant if your customers buy your products or services online. Here is what does matter – our society will rapidly continue its trend towards online existence. Regardless of where you are at with your online presence, you can do more. Do you have a blog? Are you using social networking to its maximum potential for your business? Does your website generate marketing and sales results? Can your website improve the experience your customers enjoy? The right investments into your web presence can improve your cash, profit, and time.
By completing these five tasks, you will empower you and your business to finish the year strong and prosper in 2009. With economic turmoil on the horizon for most if not all of next year, those who focus on these and other critical tasks will be in the best position to survive the tough times ahead and thrive when our economic outlook turns more positive.