What Prepping Year-End Financials Looks Like (and How to Simplify Them)
Are you ready to prepare your year-end financials for your business and your clients? The running corporate joke is that year end financials are the Big Game of the Year. It’s The One that Matters; where the stakes are highest. To get it done and win the game, you need three things: to settle the administrative items, plan a little strategy, and think about your tracking.
Administrative Items
Administrative items are the things that every business needs to take care of (the “boring” paperwork LOL). Make a checklist for you and your client that includes things like:
Contracts
Do an end-of-year review of the contracts involved in your own business and your client’s (as their DOO). Do the contracts you have still cover the business as well as they did a year ago? (Or whenever they were signed?) Is everything aligned with your current offers?
Are there any new risk areas that need to be covered? For example, if you’re going from a 1:1 service-based business to a product-based business, you need to think about intellectual property protections and licensing to go with that new business model.
Make sure you’re considering your contracts with customers as well as any business we receive services from. As DOO, make sure that your client has all the contracts they need.
One thing that sneaks up on many of us is dealing with anyone who we (or our client) might have hired on a 1099 contractor basis (as opposed to an employee). Take a few moments now to make sure that you have the EINs (Employer Identification Numbers) of all contractors so you don’t have to rush and get that in January.
Insurance Review
Now it’s time to consider your business insurance. Have there been any changes in your business or your client’s that would warrant a review with your agent? I personally think it’s a good practice to get on the phone with them at least annually to make sure that you’re covered properly.
For example, if you have more revenue, you might want to increase insurance coverages. If you’re doing more consulting vs. administrative work, it may be time to discuss that with your agent.
Team Performance Reviews
Have you planned for end-of-year performance reviews for employees, as well as any gifts or bonuses? Some people like to do these as a nice wrap-up at the end of the year. Personally, I like to schedule these on more of a fiscal year basis and do them in the summer so everything doesn’t hit all at once. But if your time is now, make sure it gets added to your to-do list.
Get a Head Start on Next Year’s Financials
You can start your year-end financials now, working on your own or in tandem with your accountant. Don’t wait until tax season to bust open the balance sheet. There are probably a few things that would be better taken care of now. Start looking at it now to make sure it’s clean and clear. If you’re not sure, ask your accountant. Do they have anything they need to draw your attention to?
Usually, the biggest issue to take care of is Accounts Receivable. Hopefully, this isn’t built up! But if there are any receivables you need to collect on; make the effort to do that now. Any write-offs you’ll need to do should be brought to your client’s attention sooner rather than later.
Then, tidy up your expenses. Are they all categorized, and receipts tracked down? This not only makes doing your taxes so much easier; it also allows for easier and smarter strategic goal-setting.
Think about what experts you need to bring on board in the coming year. Do you need to get a tax pro lined up for tax season? (Also think about asking what you could do now, before the end of this year. Are there any deductions that would be better to take this year instead of next? Now’s the time to think about that.)
Are there other experts you need to bring on board for your business growth? I’ve been working with a content strategist (thanks Abby of The Content Experiment!) who has made a big difference in my business.
And that brings us into…
Strategy Work
The end of a year is a great time to take a good look at your Mission, Vision, and Values.
Mission
What’s your mission? It’s why your company exists. It’s what you’re doing with your business to serve or help people—your reason for being here.
For example, Innowik exists to help other operations strategists track the right things so they can do the right things so that they have more time and more financial freedom. That’s the why behind the why behind the why. I could say, we help operations strategists track the right things and leave it at that. But why is that important? It’s so they can be strategic with their time. Why is that important? It’s because that smarter strategy helps them be more effective so they get more done in less time and provide more operations value to their clients, which gives them more financial freedom. And helping others get that freedom is personally very important to me.
If you already have a mission statement, pull that up and look at it. Does it still fit? What has changed about your business and who you’re serving since you wrote it? Is it time to update it?
Vision
If the mission is about what you want your business to look like now, vision is about what you would love for your business to look like in the future. Your vision statement should feel big and grandiose to the point of being scary.
For example, if I have $100k in revenue and I say I want to have $300k in revenue next year, that feels crazy. That’s huge growth. Or, if 1:1 services are currently 99% of my business but I want to have a more “passive” revenue based on product sales rather than services, it might seem scary to have to sell $5k in dashboard templates and get to 75% of my revenue coming from product sales in 3 years.
Especially to operators, this kind of visionary goal setting doesn’t come naturally. It can seem big and foreign, because we tend to be integrators who work with visionary CEOs, instead of having those visions for ourselves.
To pull that vision out for yourself and to help your CEOs articulate theirs, it’s helpful to bullet out a few key points. Ask yourself and your CEO:
What do I want my lifestyle to look like a year from now?
What kind of hours do I want to be working?
How do I want to spend my time in my company with clients or internal teams?
Do I want to spend more time outside my company, as a thought leader or speaker in the industry?
Then, go into specific, numbers-based vision bullets that show what you want your revenue, products, or service offerings to look like so that they will support your goals.
Values
Your values are simply your core values. What’s important to you and your business?
Personally, I have 7 values that are important to me listed on my website, but I’m working on consolidating them to a more comprehensive list of the Core Four. The Core Four would be a word and a statement that describes them to get the full breadth of those values.
The general rule is to have no more than six.
So how do you think about that to figure out what your values are and narrow them down?
One way I like to approach it is to think about the client that you most love. What does that client look like? What are the values you share with them? And then think of the opposite—what kind of client would you like to repel? What red flags do they have that make you want to avoid working with them? Thinking of those two together, your values will become clear to you.
Once you identify the things you truly value, it’s easier to move forward. Many business decisions, marketing efforts, and more become much easier. You can see the path you want to be on and why.
With all of this work on your Mission, Vision, and Values, you can begin to set your goals for this next year. What goals do you want to hit in Q1 and Q2?
Tracking
In order to fulfill your mission, realize your vision, and live your values, you need to know you’re doing the right things. To know that, you need to measure and track your progress.
For example, let’s say you’re moving to product-based sales. That means you’ll want to track sales by offer, as a KPI. If you’re a service provider and you want to hold more client strategy sessions this year, you’d want to track sales by type. If your goal is financial stability, you’ll want to keep an eye on operating profit. (Don’t miss my article on How to Set KPIs.)
You can start the year off fresh, focus your goals, and track your KPIs—with a dashboard!
What kind of dashboard do you need? How do you get started?
If you’re feeling up for a little DIY work, take a look at my Download n Done Financial KPI Dashboard. It’s a perfect dashboard template ready to go.
My best recommendation to start your year off with an amazing bang is to schedule my signature Dashboard Intensive option. This is truly a custom option where I’ll be your (or your client’s) metrics and KPI brain, and build the dashboard that works for you with my Metrics Pro Method.
Need something in between? Let’s set up a quick power session so I can help you come up with a dashboard plan that works for you or your client. Or, let’s spend a Data Strategy Day together! I’ll help you set your or your client’s KPIs and create a new dashboard tailored to fit.