It’s the end of the year. And that means it’s time to make your New Year’s resolution. For the small business owner, this is your opportunity to resolve to make your business better.
Most Americans fail to keep their resolutions
According to Forbes.com, 40% of Americans make New Year’s resolutions. Of these, only 8% of people actually achieve their New Year’s resolution. According to the article, many fail because their resolutions are too grand in scope. Some resolutions are fuzzy and not fully measurable. Sharing your resolutions with family and friends can increase your probability of success. Most importantly, you must believe that you can achieve your goal.
Resolution ideas for the small business owner
Now that you have a better idea of how to increase your probability for success, here are some ideas for a New Year’s resolution to improve your small business:
Start using a computerized bookkeeping system. At Seiler, Singleton & Associates, we still see many business owners who either maintain a manual set of books or just maintain a check register. Often, these business owners rely on their gut instinct or the cash balance reported on their monthly bank statement as their only sense of how the company is doing. But it takes a lot more than gut instinct to run a business.
Having the ability to print an up-to-date balance sheet and income statement, along with detailed accounts receivable and accounts payable reports, can mean the difference in making the right business decision and the wrong business decision. If your small business does not have a computerized bookkeeping system, now is the time to upgrade.
Pay more taxes. Yes, I know. This resolution seems insane. Everyone wants to pay less taxes. But resolving to pay more taxes in 2017 is a resolution to be more successful by managing your business to have a greater profit.
Step one to increasing your business’ profit: make a budget. Be realistic. You are probably not going to double your revenue this January as compared to last January. But planning a 5% increase in sales can lead to some brainstorming about how to make that happen. And you can probably trim some expenses, too. What did you do last year that you could be more efficient at this year? What expenses did you incur that really did not help to grow your business? Remember that a budget is a tool to manage expenses. It is not a license to spend.
Save for retirement. Yes, your business may be your biggest asset. Selling it at retirement may more than adequately provide a comfortable retirement for you and your family. But small changes in your market or in the overall economy can drastically reduce the value of your business.
Having a retirement plan for your business and regularly contributing to the plan is your best hedge against a loss in value of your small business. Not only are you setting aside assets for your retirement, but these assets will be invested in other industries, providing diversification for your overall investment portfolio. Yes, you should consider your business as part of your investment portfolio.
Hold your annual meeting. If your business is legally organized as a corporation then you are probably required by state statute or your company bylaws to hold annual meetings to elect officers and directors. If you are not having these meetings, now is the time to start. Remember to keep minutes to document the meeting and the actions taken by the stockholders and directors. This is an excellent time for the stockholders to get together to update legal documents, such as by-laws, and to also set goals for the upcoming year.
If you are organized as a limited liability company, your by-laws may also require an annual meeting.
Execute your succession plan. A succession plan is not just for small business owners nearing retirement. If you do not have a plan, make a resolution to name a successor to your company and commit a plan to writing.
If you do have a succession plan in place, then now is the time to review the plan and update the key components of the plan. Is your successor still a viable option? Does your formula for the calculation of your company value reflect the current economic reality of the company? Having and regularly updating a succession plan helps to ensure that your family is covered in case of your death or disability.
Read Proverbs. Start off the new year with a little wisdom. January has 31 days and the book of Proverbs has 31 chapters. Read one chapter per day in January and apply this timeless wisdom to your business practices.
Make your resolution
I hope these resolution ideas will help spur you on to resolve to improve your small business. However you resolve to improve your business in 2017, remember to Keep It Simple Stupid. Your resolution should be simple and small in scope while also being measurable and achievable within a reasonable amount of time. And don’t forget to notify your business partners and employees of your New Year’s resolutions so they can keep you accountable.