Tip: Year-End Business Assessment
Tip of the Month
Tip: Year-End Business Assessment
As the year-end fast approaches, it’s a good idea to invest some time and effort to conduct a review to see where your business stands and what impact the changes you encountered in 2014 had on your bottom line.
Here’s a checklist to get you started:
Starting with the most important first, how did your business do during 2014? What profits were left when you paid employees’ wages and benefits and subtracted your over-head costs and value of goods sold? Did you meet your projections? If there is a substantial variance from 2013, or if your business failed to meet profit projections, identify what happened and determine if the issue is a one-off or an ongoing challenge.
- Costs of Doing Business
Look at your bills and expenses. Are the expenses you incur increasing proportional to sales and profit growth? Which categories (phone/Internet, rent, IT products or services, wages, etc.) increased in 2014? What are you paying for phone, Internet and other business services? Consider renegotiating or looking for better deals. Have your suppliers upped their charges? Are there less expensive options that won’t affect quality? Have you added personnel or rewarded employees with raises?
- Sales and Earnings
Review sales to date (and projected sales for December 2014). Compare month by month figures with 2013 tallies. If there is a difference, is the variance due to:
- Product sales – New launches or discontinued items?
- Customers – Have some clients cut back/increased their orders?
- Competition – Are competitors cutting into your market share? If they are, what are they doing that you’re not?
- Geography – Are sales declining/increasing in certain locales
- Seasonality – Are some declines/increases based on seasonal needs?
Identify promotions that worked and ones that didn’t. What are the factors involved (planning, staffing, timing, funding) in the success or failure of specific efforts? Is your marketing budget adequate and do you have the right people and programs in place?
Take a look at your products/services from a category or an individual product standpoint. How do they stack up compared with 2013? What are your core products and do they still sell as well as they did? Are some reaching the end of their life cycle? Have you added products and what did they add to the bottom line? Do you need to develop new products/discontinue others?
List your major competitors. What has changed in your sector? Are you facing new or re-energized competitors? How have your major competitors marketed their products over the past year? Have you lost customers to competitors and, if so, why? Have you gained customers and, if so, how?
Has your staff increased or decreased? Have you lost major players or hired some new talent? How have the new hires/departures affected your costs, product development, sales and profits?
The above should get you started on an annual assessment of the state of your business. Depending upon the nature of your products/services you might want to look at additional areas like supplier relations and partnerships and associates, too.
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.