Next year is coming up fast, are you ready?
It might make me unpopular, but I always treat July 4th as the back nine of summer.
It happens every year: Kids are off of school, you’re going on vacation, everything’s a little bit slow. And then Fourth of July hits, and then it’s Q3 and time to get everything ironed out and closed before October, because November is Thanksgiving and holiday season. (Deep breath.)
When it comes to business planning, the same idea applies.
You need to be thinking about next year’s planning in the summertime.
Come January, a lot of business owners will look at their tax situation and think about how nice it would have been to do a retirement plan. But you need to find a reputable company to help with the asset management, you need an administrative group. Then there’s the tax scenario that needs to be run: What is the right amount for us to fund and how do we fund this in a way that works for the company but also provides a really nice benefit for our employees? That takes planning.
In January, there’s not a lot you can do to reduce your taxes. But if you start that conversation in July, August and September, you’ve got time.
There’s so much more to queue up in Q3:
What’s the shape of your current workforce compared to capacity? Do we have any acquisitions or expansions that we need to make?
Answering those questions accurately requires a forecast: What’s your projected revenue and costs? Is your team the right size to achieve that?
When we talk to service-based businesses, we like to measure: What size are you built to be? Does your workforce match your capacity? Do you want to grow or optimize what you have? Is your pipeline the right size for your projections?
Say you decide you’re in growth mode: you are ready to take on a new team member January 1st and plan to sign work accordingly. Well, if it takes a month to hire and two months to train, that job search needs to start in September at the latest (August if you count holidays).
Or you might be working in a capital-intensive industry and you need to establish or increase your line of credit or secure a loan. Big banks are not known for their speed – and there’s a fair amount of legwork you need to do on your end to be ready to start the approval process.
Or you might be thinking about dipping your toe in the water and considering a sale next year: Are your books in good shape? If you want a buyer to be willing to rush to their checkbook next year, you need to get things in order with your valuation today.
That’s why scenario planning needs to happen early: So you can map out all the potential twists and turns, well before it’s ‘go’ time.
It’s human nature to wait until things are urgent to take action. Whatever you’re wanting to do, start building it now.
If you’d like help planning for next year, find out how our virtual CFOs can set you up for success by requesting a consultation below.