It might be a little early to properly celebrate the new year, but that doesn’t mean that hopes for a healthy and prosperous 2018 aren’t high. Making resolutions isn’t the only way to help set yourself up for success, though. With a little bit of advance planning and preparation here in the midst of holiday sales and chaos, you can set your business up for a strong start next year. Specifically, in four important areas: taxes, leases, inventory and labor costs.
Taxes: Being aware of taxes, what to expect when they come due and what is changing in terms of what you owe, is an essential piece of preparation for the new year. Leasing a property already includes some taxes and fees, commonly abbreviated as TICAM – which stands for taxes, insurance, common taxes and maintenance – that are paid to the landlord. When you already have money designated for taxes coming out of your account, it can be easy to forget that more taxes will be coming due in just a few months, especially since those taxes will be on property and equipment you’ve probably already paid for. It’s also a good idea to check with our account – and if you don’t have an accountant, to get one – on whether you should prepay a few expenses for a better tax return. Even paying 24 hours early might be able to give you a better tax return.
Lease: Considering your lease as you plan for the next year is another important step to tick off on your 2018 checklist. Typically, TICAM is reconciled at the start of the year, and should not be a large adjustment. Last year, though, Durham revalued commercial properties, which in some cases caused taxes to more than double. Many leases, no matter when they were signed, include a scheduled re-evaluation and potential price adjustment in January. A large unexpected variance could close a small business quickly.
Inventory: Keeping solid stock of your available inventory when you’re cleaning house – literally, figuratively or both – for the new year. Do you have the right inventory, the right mix and level, for January 1? Fast seasonal sales may have depleted your stores sooner than you expected, and a post-holiday slowdown may leave you with excess inventory if not properly accounted for. Along with other expenses, inventory can have a negative impact on cash flow. Experience will help small business owners become better at timing when to reduce inventory and free up cash while not running out of products, as well as effectively price seasonal products to sell higher and lower when appropriate to maximize inventory movement and profit. Comparing current conditions to data from the previous year when possible can do wonders for your inventory efficiency. If this was your first year in business, now is the time to organize those records for use next year!
Labor: Labor costs are one of the biggest expenses in business, and also one of the larger variable expenses that you can directly control. A small business owner can act quickly to adjust schedules to the needs of their business, but taking care of the people in your business and finding a way to balance their needs is equally important. Increased labor needs during the holidays means preparing for a slower period early in the next year. Seasonal employment can be a great strategy to balance both, bringing in new employees who require minimal training while also maintaining high morale among regular team members since they have no fear of being replaced long-term.
Think through: As with many other similar situations, heading into a new year is a great time to make a list. Itemize your expenses – both changing and static – including taxes, TICAM, lease, insurance, inventory, labor, and whatever else is relevant to your business. Consider ways to move seasonal inventory and replenish it with what you’ll need in the future. Consult data from previous years, compare with figures from around your place of business. Talk with others in your trade association, maintain adequate staffing, and take care of your team. Look for creative ways to boost productivity and drive sales. Start the year off well, and plan for success!
About the Author:
Gregory Woloszczuk is an Entrepreneur and experienced tech executive that helps small business owners grow their top and bottom line. Gregory believes in straight talk and helping others see things they need to see but may not want to with a focus on taking responsibly for one’s own business. He and his wife, Maureen, started GMW Carolina in 2006.
Gregory has been fortunate to have been part of building teams for companies that went through hyper-growth as well as his own company. He also has experience in working through economic downturns and taking responsibility to fix what is in his control. The focus has always been working with partners, customers, and building a successful business channel. His range of experience includes marketing, sales, support, training, and operations.
Gregory holds an MBA from Nichols