As we approach the end of the year and the start of tax season, are you pulling together year-end financial reports and information for your accountant? Don’t just hand them over, take the time to review them. Then ask yourself some relevant questions to help make improvements.
Go beyond revenue or sales. Explore all areas of the business that drive profitability. Look at trends. by comparing results this year with prior years. Then armed with information, create a better roadmap for success next year.
7 Questions to Ask at Year-End
- Where did our revenue come from? Think in terms of customers and products/services. How many new customers did we get? How much of our revenue is coming from current customers? What products or service categories grew versus declined?
- What are the spending habits of our customers? Here we want to consider two things. What is the average amount our customers spend and how frequently do they buy? Is spending up or down? Are they using less or spreading the sales among more vendors?
- Are the gross profit margins higher, lower or the same versus last year? How do our margins compare with others in our industry?
- Is our labor as a percentage of sales up or down? Is increased labor translating into improved service and increased profitability? Do we have the right people to get the results we want?
- Are fixed expenses up or down versus last year? Can we reduce costs while also increasing value? Don’t assume. Request quotes. You don’t need to change suppliers but you should know the going rate and other value vendors provide.
- Is your business debt higher, lower or the same when compared to previous years? Is it manageable? Do you have access to capital moving forward?
- What did you actually pay yourself for salary or draw this year? Is it more than last year and adequate to meet your personal obligations? This is one you should never ignore. Your business. Your risk. Your pay!
Where Are Your Opportunities?
Based on your findings, where do you need to see improvements? Of course, you must do something to create change. So what actions do you need to take to improve each of the areas you identified? List those tasks and you have the foundation for a simple road map to get you there.
Need a Better Road Map?
If you need a better course for your business but struggle with planning and goal setting, check out my Ultimate Goals and Action Planning Guide for small business owners. With my step by step instructions, plus easy to use templates and examples, you can create an effective, actionable plan in less than 8 hours! Click here to learn more and get started.