“Summertime, and the living is easy.” Perhaps, Gershwin is taking it easy, but time is a’ wastin’ if you aren’t starting to prepare for end of the year profits. Retailers estimate that 40% of a typical business’ income is made in the final quarter of the year. Because of that, summer business planning is important. You should be sowing seeds now if you want to reap a part of that harvest.
Playing Catch-up
Of course, before you can plan for the end of this year, you need to finish what you started last year. Perhaps you got a little behind in your bookkeeping last year and when April 15th rolled around, it caught you by surprise. You may have guessed at last year’s figures and filed a six-month extension on your income taxes.
Hey, it can happen to anyone. However, if you are still procrastinating, it’s time to close out the books on last year, catch up on this year’s accounting, and resolve to not let this happen again this year.
Once you have put last year to bed, the next thing is to get current on this year. Before you can think about where you are going, you should consider from where you’re starting. It’s not enough to just look at the balance in your bank account and decide whether you’re having a good year or a bad one. Think about any upcoming bills, tax payments, and major expenses.
Taking Your Business’ Pulse
You should make sure all of your expenses from the first part of the year have been entered and all payments made to you and then calculate what you earned. Once you are caught up, generate a profit and loss statement for each of the first months in 2015.
Compare what you’ve done in the first few months of this year with the same months from last year. Hopefully, you’ve seen an improvement and your business is growing. If not, think about any reasons that may have contributed to your poor performance in the first two quarters and take steps to get back on track.
Planning for Profits
Once your books are current, consider anything you need to be ready for the upcoming last quarter of this year. Make plans to maximize your potential for this year’s profits. If your business is in retail, ensure you will have adequate inventories of popular products for the gift-giving season. If you are a B2B service business, consider what you can provide to other companies in the final quarter when they have money to spend and less time to do things for themselves. Small manufacturers should look for trends and anticipate warehousing items that sellers and their customers will be wanting at the end of the year.
Think about your operations. Will you need to hire seasonal help or retain a couple of contract employees to handle excess work for the busy final quarter? Do you have training programs in place to get these new people up to your standards? Will you have cash reserves available when the extra funds for payroll, contracts, components, or inventory are needed? Review the data from last year’s final quarter and be prepared for this year. Instead of simply reacting to problems as they occur, put plans in place to meet the increased demands of the upcoming final months.
Planning your most profitable quarter will help you make the most of this opportunity. Failing to consider this profit season invariably leaves money on the table that could be going into your business and your pocket.
The Bottom Line
Failing to plan is planning to fail. You can maximize the profits of the last quarter with a little planning and preparation.
However, you need to clear your mind and your plate of any leftover business from last year. Finish and close the books on 2014 if you haven’t done so yet. Make sure that pile of receipts and invoices in your desk drawer for the first two quarters of this year are entered into your accounting software and your books are current. Then you will be able to determine the fiscal health of your business and free your creative mind to focus on the anticipated profits ahead.