For most of us 2020 felt like the year that would never end, and yet finally, as life’s activities are slowly opening up, the year is coming to a close.
As we say goodbye to the roller coaster of 2020, we are all hoping for a better year ahead in 2021. Small business owners also need to focus on year-end business planning while taking stock of the year that was.
There are three useful business activities to perform towards the end of the year: taking stock, next year’s preparation, and planning. Each is key to running a successful business and aligning your goals and resources to take advantage of new opportunities.
Since the end of the year can be a hectic time, it’s not always easy to keep up with all the preparations that are required to wind down 2020 and plan for 2021.
To help you get ready, we’ve prepared this year-end small business checklist.
Here’s a quick rundown of everything you need to do before 2021 becomes a reality.
Prepare Your Key Financial Documents
Basic financial documents play a crucial role in your business. They provide a guide to your business’ financial position and health and details your assets and liabilities, profit, expenses, and cash flow.
They allow you to see if you’re running a healthy business or if you need to adjust moving forward.
If you need some adjustment – such as an increase in sales or lower expenses – your financial documents show you where change is required.
Even though we are only halfway through the financial year, now is an excellent time to ensure everything is on track.
The critical financial documents to keep up to date are:
- The balance sheet, showing all the assets, liabilities, and equity.
- The income statement, showing revenue, expenses, and profit.
- The cash flow statement, showing the opening and closing cash within a specific period.
Review Your 2020 Goals
Even though 2020’s challenges were almost completely unforeseen, it’s still a good idea to evaluate your goals from last year. Now that you have clear visibility of your business financials it is easier to reflect and understand the internal and external influences on the bottom line.
If you created a business plan for 2020, review it to see which objectives and outcomes were achieved.
Did your business accomplish what you set out to do? Or did you get completely off track? Either way, knowing what was (or wasn’t) achieved is a great way to get some clarity and closure. When you do your business planning for 2021, it means you can adjust or carry over any goals for the coming 12 months.
Update Financial Software
Just like your phone or computer, your financial software often gets updates. Sometimes you need to do a full version update or even replace old, outdated software. The end of the year, while things are slowing down, is a great time to do this.
With a new update to your financial software, you may end up with a better set of tools that can help improve your business.
If you are unsure what the latest and best options are, be sure to reach out to your bookkeeper or accountant for advice. Most software in 2021 is cloud-based, and this will help you avoid having to make backups of all your files on disks or hard drives.
Ensure to look at your state government offerings, for example Victoria is offering a Small Business Digital Adaptation Program that is designed to help eligible businesses trial and access tools to assist their day-to-day operations.
Do A Client or Product Stock-take
The end of the year is an excellent time to look at your current client base and reflect on the highs and lows of working together. It might seem counter-intuitive to reduce your clients, but we often tend to hold onto clients who do not best serve your business plans. And of course now is the time to plan how we can continue to best serve the client base we will be taking into 2021.
The same goes for existing projects or product lines that you have. Are they worth continuing in the new year? Do they provide enough profit to justify the effort you make?
The best businesses are always evolving their product offering and their client base, and it’s wise to do this from time to time.
Plan Team Building Events
Make sure not to forget your employees in your year-end planning. They are, after all, an essential part of your business success. The year-end holiday season provides an excellent opportunity to reward them and to do some training for the year ahead together.
After the challenging year that has passed, you may want to boost morale and company loyalty. What can you do to help your employees feel valued? A holiday party? Company time to do some charity work? Some additional training to help them up-skill now in the year ahead? Consider and plan some events that can boost morale and build long-term loyalty with your team in 2021.
Check Eligibility For Subsidies
With 2020 ending soon, so are some government programs that have supported businesses and individuals through the COVID-19 crisis.
For example, the JobKeeper Payment extension 2 is the final installment of the JobKeeper scheme that will assist businesses until 28 March 2021. This JobKeeper Payment offers support for businesses and not‑for‑profits which continue to be significantly impacted by the Coronavirus in the December 2020 Quarter compared to December 2019. More information is available here.
For those companies that are no longer eligible to receive the JobKeeper Payment they may be eligible for JobMaker which helps businesses in hiring new staff who were previously receiving a government subsidy. More information is available here.
The end of the year is also a good time to check which subsidies might have changes in 2021. Be sure to be on top of what the government rules are and how it might affect your business.
As we move through the challenges of the past year, one useful takeaway is that we are now more resilient and focused on creating a better future. Through proper review and planning, you can set yourself and your team up for a profitable year ahead in 2021.
Centegrity has over 14 years of experience assisting businesses with bookkeeping and business mentoring and is here to help with planning and strategy into 2021.
Don’t hesitate to contact us or fill in the form below.