Every new year, business owners should take the time to sit down and do a little planning, just to make sure that they'll be able to keep their company afloat and on the right track. To check that the business will have the necessary tools to ensure it's financial and operational goals will be met, and that the firm's employees will be happy with their working environment. Read on for some tips to help make the planning process run smoothly for you and your business.
It should go without saying that every business owner should periodically review vendors and suppliers to make certain that they are giving competitive prices and delivering quality service. The beginning of the year may be the best time of year to review vendors.
In many cases, suppliers may have just completed their budgets for the current fiscal year, and they are looking to pin down business and cut deals to ensure that they achieve their annual financial objectives.
With that in mind, owners should ask themselves the following questions:
- Are current vendors charging competitive rates?
- Are current vendors providing good service and adapting to the business's changing needs?
- Are there any new vendors or suppliers who deserve a chance or from whom the business might obtain a quote?
- Does it make sense to try out a new vendor, even if it means giving him or her a small order?
- Might trying out a new vendor provide the business with leverage over an existing vendor?
Again, business owners will need to answer these questions in order to know whether they are getting good deals. Getting the best deals enables the business to keep its costs low, which improves the bottom line. Again, the first few months of the year are an opportune time to do this.
Manufacturing companies and many service-related businesses depend on machinery, supplies and a variety of other equipment (from vehicles to assembly devices) to operate. However, many business owners are so caught up in the day-to-day activities that go along with running the business that they sometimes forget to do periodic equipment checks and make sure that they have what they need to grow the enterprise.
The first quarter is a good time to evaluate a company's equipment needs and to determine whether any capital investments need to be made. That's because identifying the business's equipment needs early on in the year can help the enterprise make its annual numbers. It can also help the business owner plan for future cash needs.
The following are questions that all business owners should ask themselves regarding equipment needs:
- Does the business have the equipment necessary to succeed and profit over the long haul?
- If not, can the equipment last another year, and can the business sustain itself using the existing equipment?
- What will new equipment cost, and where can quotes for the equipment be obtained?
- Does the company have the cash on hand or the ability to finance such purchases, or will the money need to come from future operational cash flow?
- Are there any expenses that could be cut in order to offset and help justify such expenditures?
Staffing needs should also be considered. It's good to recognize any deficiencies early on in the fiscal year so that appropriate adjustments can be made. Also, keep in mind that finding, hiring and training the "right person" can take a lot of time, so it's a good idea good to get on the ball as early as possible.
Furthermore, it's important to realize that many workers tend to ponder their own futures at the end of a year. They start thinking about whether they intend on sticking with the company or moving on.
While the old adage says that the best defense is a good offense, sometimes the best offense is a good defense, and insurance coverage is a business necessity.
At the beginning of the year, new rates for health insurance, business liability insurance, automobile insurance, umbrella policies and other insurances tend to come into effect and it's a great time to go quote shopping.
All business owners should ask themselves the following questions regarding insurance:
- Is the company adequately covered in terms of liability and/or does it have adequate fire and health insurance?
- Are insurance companies running multi-policy deals at the beginning of the year in order to garner your business?
- Are there any new insurance carriers that might be able to provide a competitive quote? (Note: Your state's insurance commissioner and even the local phone book should be able to yield this information.)
- Has the company taken on any new assets or business interests that haven't been accounted for and protected by existing policies?
Businesses looking to set up 401(k), simplified employee pension (SEP) or other retirement plans should do so as early as possible during the year. Setting up a plan early on can permit employees to take full advantage of their annual allowed pretax contributions. Theoretically, the more time the money is growing on a tax-deferred basis, the larger the nest egg they may accumulate.
Reviewing the plans, selecting an investment firm, and actually setting up a plan doesn't happen overnight. Again, getting an early jump on these efforts makes sense.
Questions business owners should ask when setting up retirement plans:
- What will the cost be to administer the plan?
- How many employees might benefit and want to take advantage of the plan?
- How much will the company need to contribute to the plan?
- Are there any advantages to setting up one type of plan over another based on costs, the firm's size and employees' retirement needs?
The Bottom Line
By definition, business owners should continually evaluate their businesses and make adjustments accordingly. However, from a number of perspectives - such as insurance, retirement planning, staffing, vendor and equipment needs - the New Year is a particularly opportune time to sit down and plan.
RetirementFind out how your 401(k) works after you retire, including when you are required to begin taking distributions and the tax impact of your withdrawals.
EntrepreneurshipLearn how to make a successful pitch to investors. Regardless of your industry, size or market, there are some questions all investors need to have answered.
EntrepreneurshipLearn how these multibillionaires built their fortunes to stand out from the crowd of the countless ultra-rich who call Los Angeles home.
EntrepreneurshipLearn how a complete risk management plan can minimize or eliminate your financial exposure through insurance and prevention solutions.
Investing BasicsUsing more than one financial advisor for money management has its pros and cons.
Investing BasicsThe reality TV shows "Restaurant Impossible" and "Kitchen Disasters" offer lessons not just for restaurateurs, but for all business owners.
EntrepreneurshipWhether or not you are a fan of human resources, every employer needs to know the answers to these questions.
InsuranceThis costly coverage protects your mortgage lender - not you.
EntrepreneurshipThere are a lot of risks associated with running a business, but there are an equal number of ways to prepare for and manage them.
InsuranceTough times call for desperate measures, but is raiding your life insurance policy even worth considering?
The two most common types of bankruptcy available to consumers are Chapter 7 and Chapter 13. Whether you file a Chapter 7 ... Read Full Answer >>
Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>
Most common retirement plans such as 401(k) and 403(b) plans, as well as individual retirement accounts (IRAs) allow you ... Read Full Answer >>
Investors can have both a 401(k) and an individual retirement account (IRA) at the same time, and it is quite common to have ... Read Full Answer >>
All contributions to qualified retirement plans such as 401(k)s reduce taxable income, which lowers the total taxes owed. ... Read Full Answer >>
401(k) rollovers are generally not taxable as long as the money goes into another qualifying plan, an individual retirement ... Read Full Answer >>