Ending Your First Year as a Small Business
Congratulations! You survived your first year in business! Take a moment to stop and reflect. It’s been a busy year learning the ins and outs of running a small business. Discovering what worked and what didn’t. Now as you wrap up and prepare to enter year two, it’s the time actually to be at the top of your game.
For any business, the end of the year is a time to make sure that you have all your ducks in a row. From making sure you have your tax documents ready to evaluating goals you set for the business and if you achieved them or why you may not have -- ending your first year as a small business sets the tone for your survival moving forward.
Why Small Businesses Fail After the First Year
Consider these facts about small businesses in their first year and beyond according to the Small Business Association (SBA):
- only 30% of new businesses fail during the first two years of being open,
- 50% fail during the first five years, and
- 66% fail during the first 10
- only 25% make it to 15 years or more
There are some reasons that many new small businesses fail:
- Not investigating the market/industry
- No solid business plan in place or realistic goals for the business
- Too little financing/not enough capital
- Marketing mishaps or no/little social media presence or footprint
- Becoming complacent too early
When you look at back at your year and see that you have one or more of these factors that may have affected your business, you need to hop on fixing those issues immediately, or you won’t make it in year two.
Here are some suggested tips and ideas as you are ending your first year as a small business to ensure you begin year two successfully:
Add Up Your Finances
You should already be doing basic things like creating balance sheets for the year, tracking your income and expenditures, and trying to identify trends in your profits and losses over the last year. Your assets, liabilities, and equities will give you an idea of how well your business performed this year. Use your accounting software to generate visual balance sheet and Profit & Loss reports. Then identify where your business did well, and where there's room for improvement next year.
But beyond those, do you know what assets/inventory you started out with? Did you acquire new ones over the course of this first year? How are you tracking and managing the assets that you and your employees use on a regular basis?
Assemble Your Tax Documents
The end of the year is the time to get together any documentation relevant to the past tax year. You’ll be happier when it comes time to file taxes by having all your documentation gathered and ready to go. Three suggestions to start with:
- If you pay taxes quarterly, keep track of what you've paid, as it will help you estimate what you'll have to pay after year end.
- Too many business owners fail to accurately estimate their tax payments. Be sure to cover state and federal taxes. Keep this money safe and separate. By starting now you should have time to put the right amount of money aside.
- Consider arranging a meeting with your bookkeeper, accountant and/or financial advisor. Talk to them and make lists of tasks that they need to carry out on your behalf. This will help them focus on your business at this busy time of year.
Evaluate Goals and Set New Ones
If you had any business goals for this past year, now is the time to see how you did. Did you meet them? How did you do this? Or if you didn’t meet them why is that and what can you do better? Just as we come up with resolutions at the start of a new year, it’s also helpful to create new goals or objectives at the end of your year as you move into year two. Make sure your goals are specific and measurable. Goals can include areas such as:
- customer service
- more accurately tracking assets
- finding ways to be more efficient
- meeting hiring needs
- setting training standards
Create Data Backups
Having backups of your data (financial, client lists, vendor lists, etc.) is always a good idea. However, the end of the year marks a great time to hold yourself to this standard and keeping it consistent in year two. It’s also an especially important time to create backups of your financial data (if you haven’t been doing it already), in case you lose your primary copies before you can file taxes.
You might consider setting a goal for next year of backing up data more regularly. Many software programs are backing up data into the cloud– which is a secure and virtually fail-proof way of storing data.
And always be sure you have your data backed up to a secondary source. If you have your data backed up to only one source which is stored at your office/place of business, what would you do if there was a theft, fire or some other natural disaster and it destroyed the only source that held your data? It would be completely lost.
Conduct Year End Inventory
The end of the year is a good time to make sure that your inventory matches what you have on paper and fix any discrepancies. Using asset tracking software can help you make sure that your actual inventory isn’t too far off from what it should be, preventing issues before they occur. Asset tracking software can also help track all of your vital assets from the moment they are scanned and entered into your inventory, including software licenses, rental agreements, contracts for service, etc. Inventory management software can help you be more efficient when it comes time to conduct your year-end inventory – and in the end, it can even save you money on unnecessary replacements for items that were only lost or misplaced.
There are lots of software options available to help businesses succeed. Many times you don’t discover the need for them until after you are settled into a daily operational groove and you are able to see what works and what doesn’t. As you move into year two, it might be time to consider adding an asset and inventory tracking and management platform like Asset Panda to your organization.
With its free mobile apps that sync with the cloud, Asset Panda is a great value. No separate barcode scanners are required, which saves customers repair and replacement costs. Going beyond simple asset tracking, Asset Panda can help you create workflows and actions that enable you to replace time-consuming processes that slow down your business. Asset Panda is flexible and completely customizable, which means it works as you need it to.
Learn why Asset Panda is one of the highest-rated asset management software today by getting your free 14-day trial (no credit card required).