Like all good business owners, you started the year with a solid plan. But is your plan still as solid as you thought it was, or are there areas that could use shoring up? Here are three revisions to consider as the year winds down.
- Look for Over and Underperformers in Sales
This is the area that offers the greatest potential for improving your bottom line. It is also one of the easiest to analyze. Basically, all you have to do is review your year-to-date sales figures to see if you can root out both winners and losers of offered products and services.
With those figures in hand, it’s a simple matter of applying a little common sense. Increase your inventory and/or marketing efforts on whatever is performing well and sell off the underperforming products at a deep discount to generate cash. In the case of a costly or time-consuming service that isn’t generating a sufficient return, you can simply discontinue it — be careful to honor any commitments you have already entered into, of course.
- Make the Tax Laws Work for You
If you’ve had a lean year in sales, or generated higher expenses than anticipated — or both — your instinct might be to defer any substantial investment in new equipment or infrastructure until next year. Not spending money just seems like the sensible, financially conservative thing to do.
But it’s not always that simple. Major purchases could reduce your tax liability this year. And if those investments can breathe new life into your business as the calendar turns, the combination of reduced tax liability this year and increased revenue next year could be your best financial bet.
- Don’t Miss Your Exit
How long do you plan to keep your company going? A surprising number of business owners don’t have an answer to that question. Often they’re so caught up in trying to keep their business on track, that they never stop to consider when and where they might want to get off.
While you’re reviewing the ups and downs of your year so far, it is good time to also put some thought into your eventual exit strategy. Selling a business can take years. So, just as you should maintain your house so that it retains its value, you should operate your business with an eye toward acquiring the best possible price when the time comes.
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-Legal and Tax Disclaimer-
This content was created by Supporting Strategies to provide general bookkeeping and accounting information only. Supporting Strategies does not provide tax, legal or accounting advice, and the information contained herein is not intended to do so. As such, the information provided should not be used as a substitute for consultation with professional tax, legal, and accounting advisors, and you should consult with a tax, legal and accounting professional before engaging in any transaction.