Even with more than half of the year in the books, many small-business owners in Las Vegas wait until December or January to assess their business and identify ways to improve financial performance. Yet making time for a mid-year check-in, when you have a good idea of your business’ needs — may be one of the best times to help your business save time and money, and operate more efficiently in the long run.
As a banker, I see the benefits of doing a midyear review firsthand. A mid-year review can help a business owner evaluate what lies ahead on the fiscal horizon and plan accordingly. The key to making the review effective is to keep it focused on the outcomes you want to attain.
Here are five key areas every Las Vegas business owner should consider at mid-year to help make the rest of the year a success:
1. Evaluate business expenses — Understanding how profitable your business has been year-to-date can help you evaluate your current position and modify your financial goals as needed. If you donât already do it, keep your business and personal accounts separate. Business checking and credit accounts that are kept separate from personal accounts can help you maintain accurate and complete records of all business-related income and expenses. Keeping separate records will also help you as you look for ways to minimize expenses and improve cash flow. A best practice is to track your cash flow on a monthly basis, which can help you improve cash flow projections and better plan for recurring expenses and business expansions.
2.Assess your business plan —Every small business should have a formal, written business plan to help with business decisions and strategic planning. According to a recent survey, business owners who said they had a formal plan reported much greater optimism for 2015. If you donât have one, or if your plan hasnât been updated in a long time, now is a great time to consider writing or updating your business plan. The process of putting your goals in writing will help you focus on long-term business objectives and the steps needed to achieve them. Among the resources available to help is a free, online Business Plan Center that we offer, which includes a tool to create or update a written business plan.
3. Prepare for transitions — While you’re developing or refreshing your business plan, it’s also a good time to look at your transition plan. As a business owner, you may not be thinking about selling your business or retiring, but it’s never too early to start planning for the future. There are many options to think about — such as whether you want to sell your business, pass it to a family member, cash out now or wind down over time — which can make transition planning seem like a daunting task. For this reason, it’s helpful to start the process of exit planning several years before you plan to make the transition. Following are four important steps to complete when preparing a transition plan:
- Identify your business exit planning goals and objectives;
- Determine what the company is worth;
- Identify transition options, including sources of funding or financing for the transition, and
- Develop an implementation strategy and timeline.
4. Re-think your payment options — Now also is a great time to evaluate all of the payment options you offer customers and determine whether these need to be updated, including whether to transition to chip card/EMV acceptance for credit card payments. Accepting advanced technologies such as credit and debit cards embedded with chips (EMV cards) is one important step to strengthen security, and merchants are encouraged to upgrade their equipment by Oct. 1, when the fraud liability shift occurs. Itâs important for small business owners to understand and research this new payment method now so you are prepared by October.
5. Think taxes — It can be easy to lose sight of the need for year-round tax planning for your business. The more proactive you can be with managing and filing your tax returns, the better. Spend time reviewing your tax entries for the first half of the year to ensure youâve captured all expenses, especially for things like cars that are used for business and personal use. If you havenât met with your tax professional recently, now is a good time to go over key filing dates and deadlines such as quarterly tax payments, and staying organized and prepared on your business taxes.
Whether summer is your busiest time of year or your slow season, itâs a good idea to conduct a midyear financial review. Taking time now can help you stay ahead of the curve and make the most of the remainder of the year.
Lester Romero is the small-business manager for Wells Fargo in Las Vegas. For more information, visit the Wells Fargo Works for Small Business website at www.wellsfargoworks.com.