By Odysseas Papadimitriou, CEO of WalletHub
It might seem like the year’s just getting started, but it’s time to start thinking about the end, fiscally speaking, if you’re a small business owner. Most companies follow the general calendar and use December 31 to mark the end of a fiscal year. But many small businesses – plus nearly 25% of the S&P 500, according to company disclosures – stray from this norm, exercising their right to use any consistent fiscal year they’d like.
No matter when your fiscal year-end may fall, however, there are a handful of measures that you must be sure to take around this milestone date. The date itself is relevant only in terms of the urgency with which you must approach these year-end tasks (and perhaps as your seasonal needs relate to the vacation schedules of financial professionals). With that in mind, here’s the four-step end-of-year checklist that all small business owners would be wise to implement:
- Get Organized & Take Inventory: The end of a year is, almost by definition, a time for reflection and taking stock. That, as it relates to small business, means reviewing financial statements to gauge your resources and prepare for tax season, revisiting vendor agreements to see if any changes are necessary, making sure you have copies of all important documents, renewing licenses, etc.All of this might seem tedious, but it’s a time-saver that also gives you a better high-level understanding of your business’s strengths and weaknesses. This, in turn, enables you to analyze what’s working and what’s not.
- Set One Major Goal For Each Quarter: Building on step 1, make it a priority to analyze your business in search of the four most-impactful initiatives that you can emphasize in the coming months, one for each quarter. Then publicize these goals within your team and make plans to evaluate your progress on a monthly basis. This will serve as a compass of sorts, keeping your corporate ship on the proper heading, which is important given the time pressures that small business owners face and how easy it can be to create a laundry list of tasks with no clear focus.
- Look For Outsourcing Opportunities: If the end of the fiscal year finds you stretched thin, more so physically and emotionally than financially, consider outsourcing key background elements of your business, such as Web security, payment processing and even email management. People think they can save money by trying to perform these functions themselves, but more often than not, they end up spending far more than a reliable service would cost with an inferior result.Entrepreneurship is tough, but it should also be fun at the end of the day. So why not pay someone to completely handle a task you’d rather avoid and spend more time focused on the things that got you into business in the first place?
- Improve Your Personal Credit: This may come as a surprise, but your personal credit standing dictates your business financing options. After all, pretty much all major lenders use personal credit reports to evaluate applicants for small business credit cards and loans. This also helps to explain why these major lenders hold customers personally liable for unpaid balances on business-branded accounts.So if you want one of the best business credit cards on the market, for example, you’re going to need “excellent” personal credit, which means a score of 720 or above. There are many tips and tricks for getting a rise out of your credit score, but two of the most reliable ways are to: 1) open a credit card and make on-time payments every month; and 2) become an authorized user on a friend of family member’s account, assuming he or she has exemplary credit.
At the end of the day, whether it’s the end of the fiscal year or not, taking these sorts of steps will make your business stronger and help you become a more effective manager. So why not go crazy and make this checklist a bi- or even tri-annual destination? Your wallet will thank you!
Odysseas Papadimitriou is CEO of the personal-finance website WalletHub, which offers free credit scores, full credit reports, 24/7 credit monitoring and customized money-saving advice.