Every new year, business owners should take time to sit down and do a little planning, just to make sure they'll be able to keep their company afloat and on the right course going forward. Doing so will help ensure that your business has the necessary tools to meet its financial and operational goals and that your valued employees will be content with their working environment and unlikely to jump ship. Read on for some tips to make the planning process run smoothly for you and your business.
- If you own a business, you'll want to do some financial housekeeping at the beginning of each year to make sure that the coming year goes smoothly.
- To avoid unpleasant surprises, be careful that your insurance policies and employee benefits are on track and not set to lapse.
- Evaluate your staffing, vendor, and marketing efforts to keep up with your competitors.
- Also keep an eye on the broader economy and whether factors such as the state of the labor market or the pace of inflation necessitate any changes on your part.
1. Consider Your Digital Footprint
Setting Up a Business Website
If you want to compete, especially with the big names, you need a presence online and in social media. Begin by creating your own website if you don't already have one. How complex it has to be and how much traffic you think it will generate will determine whether you can set it up yourself or should hire a professional to do it for you.
You need a recognizable domain name that customers can find easily. You'll have to decide whether you want to share a host with other small websites, set up your own dedicated one, or employ a managed hosting service for larger businesses. You should build in costs for website maintenance and marketing. And you need a marketing plan to ensure that—once you have your website up and running—it will draw visitors. After all, what good is an online home if nobody knows your address?
Maintaining a Social Media Presence
These days a social media presence for your business is essential. You should at least know what Facebook, Instagram, Twitter, Snapchat, LinkedIn, Pinterest, YouTube, and TikTok, among others, look like and which audiences they serve. If you're unsure of how or where to start, there are services that can help set up your social media presence for a cost. You can also hire them to help you maintain that presence if that's not your strong suit or you simply don't have the time.
If you are going to be hands-on, you need to create a social media team within your company to plot your online strategy for reaching potential patrons. Said team needs to define your audience, what its interests are, and how to reach it through existing content, newly created content, and proper targeting of platforms (older people tend to make Facebook posts, for example, while today's youth are busy creating TikTok videos). Blogging, video blogging (vlogging), and podcasts are just some of the ways to get your business name out there.
Every business owner should periodically review its vendors and suppliers to make certain they are providing competitive prices and delivering quality service. The beginning of the year may be the best time to do it. In many cases, those companies will be working on their own budgets for the coming year and looking to pin down business and cut deals to ensure that they achieve their annual financial objectives.
With that in mind, business owners should ask themselves the following questions:
- Are current vendors charging reasonable rates?
- Are current vendors providing good service and adapting to the business' 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 out a small order?
- Would 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 to operate. However, many business owners are so caught up in the day-to-day activities that go with running the operation that they sometimes forget to do periodic equipment checks and make sure they have what they need to grow the enterprise.
The first quarter is a good time to evaluate a company's equipment needs and determine whether any new capital investments are in order. Identifying the business' equipment needs early in the year can help the enterprise make its annual numbers. It can also help the business owner plan for future cash or borrowing requirements.
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 existing equipment last another year, and can the business sustain itself using it?
- What will new equipment cost and where can you obtain quotes for it?
- 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?
You'll also want to consider your staffing needs. It's advantageous to recognize any deficiencies early on in the year, so that you can make the appropriate adjustments. Also, bear in mind that finding, hiring, and training the right person can take a lot of time, so it helps to get moving as soon as possible. That has been especially true this past year, when a low unemployment rate and hot job market meant that potential employees often had multiple offers for their services.
Finally, it's important to realize that many employees ponder their own futures at the end of the year. They may start thinking about whether they intend to stay with your company or move on. If they choose the latter, you will have to deal with the consequences.
Though the old adage says that the best defense is a good offense, sometimes the best offense is a good defense. Simply put, 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 types of insurance tend to come into effect, so it's an opportune time to go quote shopping.
All business owners should ask themselves the following questions about their insurance:
- Is the company adequately covered in terms of liability and does it have adequate fire and health insurance?
- Are insurance companies running multiple policy-bundling deals at the beginning of the year in order to win your business?
- Are there any new insurance carriers that might be able to provide a competitive quote?
- Has your company taken on any new assets or business interests that haven't been accounted for and protected by existing policies?
6. Retirement Plans
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 eventually 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.
Here are some questions business owners should ask when setting up retirement plans:
- What will it cost to administer the plan?
- How many employees might benefit and want to take advantage of the plan?
- How much, if anything, 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?
- And, finally, which type of plan or combination of plans will best meet your own retirement needs?
Why Is Planning for Businesses at the New Year a Good Idea?
Fiscal years often begin with the new year, so reevaluating and making any necessary changes at that point gives you the maximum benefit across the next 12 months. It also gives participants in retirement plans the opportunity to maximize their savings.
Which Areas of My Business Should I Look At?
Six important areas to consider are your online and social media presence, vendors, equipment, staffing needs, insurance, and retirement plans.
How Will Rising Inflation Affect My Business Outlook?
Of course, no one knows for sure whether inflation will continue to rise in the coming year or begin to abate. But you'll want to factor it into your planning. Among other things, it could affect your borrowing costs, the prices you pay for supplies, and the salary expectations of your employees. You'll also need to weigh whether to raise your own prices and by how much, as well as the potential impact that might have on the demand for your products or services.
The Bottom Line
Business owners should continually evaluate their businesses and make adjustments accordingly. However, from a number of angles—such as insurance, retirement plans, staffing, vendors, and equipment needs—the new year is a particularly opportune time to sit down and plan.