By: Kristen Gramigna
The approach of the end of the year has a particular significance for startups in terms of evaluating finances and operations — and mapping a new plan for the future. Here’s the ultimate startup checklist to finish by the end of the year.
1. Get your books in order. Unless you’ve made special accounting arrangements, your fiscal year most likely ends on December 31. Because your annual tax obligation is based on the eligible business-related expenses you claim in tandem with the income generated, it’s imperative that you have a thorough and accurate record of all business-related financial transactions to reflect in your annual tax filing — and that outstanding items are resolved before the new year.
Review monthly transaction records to ensure that you have invoiced clients appropriately for products sold and/or services rendered, and received payments owed. If invoices are outstanding, follow up on the whereabouts of funds to ensure the payment is deposited into your bank accounts by year-end. (Based on the accounting method a business uses, for example, invoices issued in December but not paid until January may be attributed to different tax years.) Likewise, confirm any bad debts for invoices that are outstanding so that the non-payment can be “written off.” Likewise, confirm that you’ve made payments you’ll claim as expenses in full to contractors, professional service providers, vendors and employees before year-end.
2. Assess your current business model. When you first started your business, establishing it as a sole proprietorship, legal S-corporation, partnership or limited liability corporation may have been appropriate, but as business grows, the most appropriate classification for it can evolve based on the potential tax advantages, reduced personal liability and, in some cases, the ability to borrow funds, or apply for grants. Use the approaching end of the year to consider if you’re still in the right structure for the business you intend to run for the next few years. If you’re unsure, consult with a financial professional or business advisor so that you have time to consider the options available, and to gather the information you’ll need to switch classifications on January 1 (for a “cleaner transition” in future tax years).
3. Identify what’s worth repeating. Year-end provides almost a year’s worth of quantitative data to objectively review and establish what went well — and what’s not worth repeating based on sales trends, marketing analytics, monthly revenue and operating expenses for the past 12 months. Additionally, use the spirit of this time of year to tap into qualitative data from clients and vendors that can prove invaluable by setting aside a few days around the holidays to place a friendly “seasons greetings” call to your top clients and suppliers; use the chat as an informal opportunity to invite their constructive criticism.
Inviting feedback at a time of year when people are typically willing to take a step back from the fast pace of their day to celebrate, connect and regroup can reveal and inspire new ways to run your business better, while also strengthening relationships for the new year.
4. Strategize how to make more of your existing business. Planning for a new year often means establishing a marketing calendar geared toward acquiring new business, but year-end should also present the time to recognize your most profitable customer segments to date, and ensure that your future strategy includes continued efforts to nurture long-term relationships. Though it can take a few years to realize the value retention marketing efforts deliver, they can prove to be a low-investment, high-return part of your growth strategy.
In fact, a study conducted by researchers at Harvard Business School revealed that increasing customer retention rates by as little as 5 percent can increase profits by up to 95 percent. Additionally, assess where you can use the resources you’ve already invested in to grow further by upgrading technology resources, improving processes for greater efficiency, or expanding your product and service offering and supplier relationships. Choose one or two areas of focus that you’ll develop over the coming year, so future year-end deadlines indicate a reminder to check in on progress, and reassess when needed.
Year-end presents the time to formulate an understanding of where your business has been, so you make progress for years to come. With these simple tips, you can establish an upward trajectory for your business. You will be primed to start each new year with an informed plan for success.
About the Author
Kristen Gramigna is Chief Marketing Officer for BluePay, a credit card processing firm that makes billing more efficient with automated invoicing for startups and small businesses. She has more than 15 years experience in the bankcard industry in direct sales, sales management & marketing and also serves on its Board of Directors.
