Start the New Year Right with a 7-Point Business Checkup

Start the New Year Right with a 7-Point Business Checkup

by Jane Haskins, Esq., November 2017

The start of a new year is the perfect time to give your small business a thorough checkup.

A business checkup means taking an honest look at the health of your business now, and seeing what you need to do in the coming months to move toward your goals. It also means finding ways to spend your time and money wisely, take advantage of cost and tax savings, and avoid exposing yourself to unnecessary risks.

Here are seven key business areas to review:

1. Financial Performance

Your business can't survive without profits and a healthy cash flow. Reviewing your business finances at least a couple of times a year will help you make better plans and avoid “feast or famine" crises.

  • Cash flow statements show what's coming in and going out. If your business doesn't have adequate cash flow, it's a sign you need to cut expenses or bring in more business—or both. Cash flow statements show you how long you can keep going on the money you have, and when you will have to make critical decisions or tap into a line of credit.
  • Profit and loss statements and year-over-year comparisons help you see how much money you are making and whether your business is becoming more profitable, or less. Declining profits are a sign you may need to change your business, operations, or marketing strategies.
  • Poorly managed accounts receivable can wreck your cash flow. A high number of accounts receivable may be a signal that you need different customers or clients, or better billing and collections procedures.

2. Banking

Review your banking relationships to see if you are paying unnecessary fees or if you should switch your current business credit card to a card with better rates or more perks.

If you might need a line of credit to help get you through any slow times that could arise in 2018, work to set it up now before you hit a financial crisis.

3. Taxes

Meet with your accountant well before tax time to explore money-saving strategies and find out about new tax regulations that may apply to your business.

For example, you may be able to take advantage of new tax breaks, you may save on taxes by setting up 401(k) and other employee benefit programs, or you may find big savings by electing a different sort of business taxation, such as S corporation taxation.

4. Insurance

Insurance is your first line of defense against potentially devastating risks. But your business may have outgrown the insurance you bought when you started.

At a minimum, you should have a liability policy, a property damage policy, and business interruption coverage.

You may need a professional liability policy or additional insurance to cover floods or earthquakes. Your insurance broker can help you determine if you need more insurance or higher coverage limits.

5. Employees

Assess your workforce needs over the coming months, considering important contracts, busy periods, and slow times. Are there key positions you need to fill? Should some people be promoted or let go? What do you need to do to retain your most valuable employees?

If you are unsure how to handle hiring, promotions, and terminations in a way that minimizes your risk of an employment lawsuit, it may be time for a consultation with a human resources consultant or employment lawyer.

6. Legal

A yearly consultation with a business lawyer can help you avoid costly legal mistakes. As you talk about what's happening in your business, your lawyer may see looming legal issues you've never thought about.

For example, a lawyer may recommend ways to protect yourself through contracts or intellectual property registrations or may advise you on resolving small problems before they morph into big ones.

7. Marketing

Identify which of last year's marketing efforts brought in the kind of customers or clients you want—and which didn't.

Is it time to call in a marketing expert to help you fine-tune your message and get it to the people you want to reach? If your cash flow and profits are off, this may be the year to strategically spend more money on marketing, not less.

A business checkup at the beginning of the new calendar year can help you maximize your profits, avoid financial and employee problems, and attract the customers and clients you want most. The time you spend on your 2018 checkup now can give your business a big payoff in the months ahead.

Get advice from independent attorneys in your state and tax professionals with our Business Advisory Plan. You'll receive an annual business evaluation when you choose the 12-month plan.