Believe it or not we have just eclipsed the mid-point in 2015.
As a small business owner you may be one of the few who are completely done with their 2014 taxes and able to focus on the future instead of the past. If that is you, then this post is for you!
Here is small business checklist of 5 things that are essential to keep your business thriving and to stay ahead of the curve.
1) Budget to Actuals
If you are asking yourself right now if you have a budget, then go get a CPA and develop a 1 or 2 year budget so you can measure performance.
In growing businesses this is a tough one to keep up, but essential for knowing whether you are hitting your targets. For most service based businesses, you’ll want to specifically track the following against your budgeted projections:
- Labor Cost/Revenue Ratio
- Gross Margin (COGS should be your labor costs)
- Revenue per employee Compared with Prior Years
- Current Year Total Revenue versus Prior Year
2) Estimated Taxes
If you are a small business owner, then you have a variable income each year. Make sure that you are paying your estimated taxes on a quarterly basis so that you can plan your businesses cash flow correctly, and so that you aren’t surprised at year end. How do you calculate them? (here is a great resource)
I’d recommend whoever files your annual tax returns to help you with your quarterly estimated tax payments because they have that info readily available.
3) Address Growing Pains
Now is a good time to evaluate your growth plans and the pain points you are experiencing so you can address them. If you have hired new employees, how are they performing? Is there a system in place to evaluate their work? Other common growing pains for small business owners might include:
- Cash flow management issues
- Antiquated software
- Company policies that are ambiguous and not defined causing employee confusion (ie: HR Handbook)
4) Evaluate Beginning of Year Plans
Where are you at compared to where you thought you would be this year. Some common questions you might ask yourself to re-evaluate might be:
- Did we hit our goals for employee performance?
- Are our employees incentivized correctly?
- Are we on the path to building company credit?
- Are we on track to making the pitch for a line of credit or funding from investors?
5) Are Business Apps Functioning as Intended?
Many small businesses choose a platform up front when beginning and eventually reach a point of needing a better system. Mid-year is a great time to evaluate this because there are usually less business related distractions during the summer.
For example, I know many small business owners using FreshBooks, Kashoo, Godaddy Bookkeeping, and other accounting platforms that become insufficient when the business starts to grow.
There are many options available, so weigh your business needs against the software you choose carefully. Our blog has evaluated a lof the financial applications that a small business owner might use, so feel free to check those out as well.
Conclusion
Summertime is a great time to evaluate your business from a general perspective, and measure your business performance against what you planned on earlier in the year. However, the key to this mid-year evaluation is good planning at the beginning of the year, so if you didn’t budget or set company goals for 2015 I’d recommend starting right now so you can evaluate your business again at year end. It’s not too late to start.
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