Year-End Business Checklist: 3 Steps You Should Take

The 3 Steps Every Business Owner Should Take At Year-End


Every year about this time I start to get my business (and my life!) in order for the next year. There’s the inevitable tax prep (don’t leave this until April), creating next year’s budget (you’re doing this, right?) and laying out your goals for the year to come. I know some people who love year-end because it gives them a chance to check-in, make a plan, and dream big about what they want to accomplish. For others, the year-end business checklist is likely stressful – receipts and financial statements and taxes, oh my!

I get it. Although I’m a numbers girl and I LOVE planning, I get overwhelmed at year-end. With so much going on in my personal life (holidays and travel and family), it often feels like too much to add business planning and financial reviewing and goal setting. But if you own a business (and yes, a side hustle counts!) then there are 3 things that I think you absolutely must do at the end of each year to position yourself for the next one. My suggestion is to set aside some time (a few hours up to one day) for each of these 3 activities. Make sure to honor that commitment on your calendar.

 Do a Financial Clean-Up and Review 

Let’s get honest. If you’re anything like me (or like most small business owners I know), your financials are, well, a little messy. Perhaps there is that stash of receipts in your purse you keep meaning to scan in and record. Or maybe, those outstanding invoices to clients who keep promising to pay “tomorrow”. Maybe you haven’t had a chance to set up your new accounting software. Perhaps you’re still paying for some expenses out of your personal bank account and others using your business credit card.

Whatever it is, the end of the year is a great time to open up your accounting system (or shoebox, whatever it may be…) and do a little clean-up. In particular, focus on the following things:

  • Make sure all expenses are entered and reimbursements paid (if you paid for things out of your personal account).
  • Follow up on all outstanding invoices to ensure they are paid or written off.
  • Confirm that all sales and revenues have been properly recorded (is Shopify syncing to your accounting system correctly?).
  • Print out your balance sheet and income statement (or bank account statements if you don’t keep a true balance sheet). After that, do a scan to make sure everything looks right. Did you really spend $5,000 on office supplies this year or is there an expense in there that should be categorized elsewhere? Does your revenue amount look correct?

Once you have everything in order, now you can focus on the review portion of your financials. While I recommend doing a financial review on a regular basis (weekly or monthly), if you haven’t looked at your numbers all year, now is the time to start. Even if you have only one stream of revenue and very few expenses, you should still create a balance sheet (shows you what assets and liabilities you have) and an income statement (shows you your revenues and expenses, and ultimately your profit or loss) and review them. If you created a budget (which I highly recommend you do!) now is a great time to break that baby out.

Now that you have all of your documents in order, go through them and do the following:

  • Review every revenue category (consulting fees, course income, product sales) to better understand how much business your business is doing. Is coaching your goal but only 10% of your revenues came from coaching this year? Does the majority of your revenues come from product sales but you want to phase out products next year? This is all good information to have for your budget planning and review.
  • Review every expense category to get a sense for where your money is going. Are you spending $10,000 in advertising just to bring in $12,000 of revenues? Are you throwing money away on subscriptions and memberships that can be cut?
  • Review your liquid assets (cash) and less-liquid assets (investment accounts, real estate, inventory) to understand how much of a cushion you have in case something happens. How many months of expenses could you pay with the cash you have in the bank?
  • Review your liabilities and debts owed. Do you have a huge credit card bill or a bank loan that still carries a large balance? How comfortable are you that you can pay this amount back given your current and projected revenues?

Once you’ve reviewed your financials to get a sense for where you’re currently at, let’s first look at how it compares to where you thought you would be. Using that budget you prepared at the beginning of the year, line up your actual numbers from this year and calculate the differences.

  • Were your revenues up but your expenses were to? Or were you able to increase revenues without increasing your expenses, thereby resulting in more profit?
  • Overall, did you increase in profitability this year or decrease (or stay the same)?
  • If your profitability increased, what category or categories made this possible? If it was due to increased revenues, which specific revenue stream? Alternately, if you didn’t increase profitability, then why not? Did you have a reduction in a specific revenue stream or an increase in an expense? If so, why? (If you’re following along, you’ll see that asking “Why” is the key here. Keep asking why until you understand exactly what is driving your numbers).

Now, let’s look at where you were last year compared to this year. Using last year’s financial statements (you kept those, right?), add in this year’s numbers and calculate the difference. Ask yourself the same questions as you did with your budget-to-actual. Again, the key here is to keep asking “Why?”

By reviewing your financials and understanding your numbers, you will be better equipped to evaluate your business model and make strategic decisions moving forward. If you want to be successful in business, you MUST understand the big drivers of revenue in your business, their potential to increase year-over-year, and the integral expenses to earn that revenue.

Assess the Current Year and Your Current Business

Still with me? Good. I know the financial stuff was a lot, but if you’re here, you made it through. And I promise you, you and your business are better off for it.

Now let’s turn to the procedural and operational stuff. Every year end it’s critical to evaluate how your business worked. I like to do this by looking at four different areas:

1. Overall what worked and what didn’t

This is where I evaluate my general instincts about the good and the bad. Did I feel burnt out or overworked? Overall do clients and customers seem happy and keep coming back? Do I feel supported by my team? Am I excited about my business and feel its momentum growing?

Take the time to check in with yourself and write down your gut reactions. This section is less for specifics and more to get a general sense of how your business is making you feel and the impact you think it is having. We’ll get into the specifics next.

2.     Your Team

No strong business exists without a strong team. At year end, I like to check in with my team and evaluate the following:

  •  Are their responsibilities appropriate for the business, their role and their experience level? Do I need to increase their responsibilities, decrease them, or alter them? How do they feel about their responsibilities? Do I need to bring on more team members due to increased workload overall for the business? Are there any team members that are not meeting their responsibilities and if so, why? What can I do about it?
  • What are my team members’ opportunities for growth? Is there room to promote someone or mentor them? Where do I see each of my team members going in the next few years (or even just next year)?
  • What are my team members’ needs and interests? Am I providing them with everything they need to do their job well? What other resources or support can I provide them with?

How you complete year-end reviews of your team is up to you. But, I think it’s a good idea to have the evaluations run both ways. Year-end conversations with my team are a good way for me to learn what I can do better, how I can be a more supportive boss, and how I can empower my team members to be more engaged, productive employees.

3.     Your Processes and Systems

Now that we’ve evaluated our team, let’s turn to our processes and systems. This is everything from the email funnel for a potential client to your process for invoicing at the end of a project. In general, I ask myself these questions:

  • What worked well with my current processes and systems?
  • Where can I improve on my processes and systems?
  • What areas are missing processes or systems? Make a plan to implement them.
  • Are there areas I can automate or outsource?

I generally like to have “process memos” for each process in my company (yes, I’m Type-A). This memo outlines who is responsible for what and the exact process to be followed for each aspect of my business. While I’m not recommending that you create process memos if this isn’t your style, at least get a good sense for what processes and systems you have in place, how they are working, and the areas for improvement. I suggest writing all of this down so that you can check back in over the year to ensure you are making improvements.

4.     Your Communications

I’m a big believer in strong communications to ensure a solid business. This means both communications with your team and with your customers. If your team doesn’t clearly understand your objectives and strategy for the company, they can’t execute that strategy in the most productive and successful way possible. And if your customers aren’t staying informed, how are they going to know, like and trust you?

So at year end I like to take stock of both. What systems do I have in place for communicating with my team and are those serving both of our needs? Have we had any communication breakdowns and where and why have those happened? Are there areas where we have excelled and can perhaps transfer that learned knowledge to other areas of the business?

With our customers, I like to revisit the customer journey and see their experience with my company at every point in the process, from that first ad or social media post to the last email after they’ve purchased. I’ll add myself as a customer to this process and sit back, waiting to see the emails and other communications come to me as if I were any other customer. How do these emails make me feel? Am I informed? How often does the company keep in touch with me?

Small Business Accounting Toolkit Checklist Meg K Wheeler

 Prepare for the New Year. 

So now that I’ve figured out where my business stands and have analyzed its strengths and planned for its areas of improvement, I’ll turn to the next chapter – planning for next year.

For all of these areas, once I’ve finished evaluating what’s worked and what hasn’t, I’ll make a list of the areas for improvement. I usually come up with 3-4 and then will typically assign them out to a quarter. For example, if I want to transition my team to a new task management software (as I am actually doing early next year!), I’ll assign that to Q1. Then I’ll assign another improvement to Q2. This way my team and I are not overwhelmed trying to roll out a ton of new processes and systems all at once and can instead focus our all to perfect the one for that quarter.

I also like to focus on SMART goals (Specific, Measurable, Attainable, Relevant and Timely). I’ll dive into exactly what each of these mean at a later time, but hopefully you get the idea – the goals I set need to be ones that we can actually achieve and ones that are clear and measurable. Simply saying “improve our team’s communication” isn’t a SMART goal, but “transition from emailing questions to a Slack Channel to better organize outstanding issues and minimize distraction” is getting closer.

With every SMART goal I will also create an action plan. In addition to indicating when I want to accomplish the goal (which quarter – see above), I’ll outline the steps needed to get there. I personally like to start from the end and work backward, as I find this makes it easier to clearly see the necessary steps and also to assign timeframes and deadlines to each step, but you should do what works best for you. Either way, setting a goal, no matter how “smart” it is, won’t get you there if you don’t outline a clear action plan.

In addition to my action plan, I also spend time planning out my budget. Remember back in the beginning when we talked about digging deep into your financials to better understand where your business was and how far it had come? Now’s the time to pull that knowledge back out and use it to craft a SMART budget – specific, measurable, attainable, relevant and timely.

Be realistic about your goals but also allow yourself room to grow. Recognize the shortcomings of this year and don’t build on them if you haven’t gotten to the root of the problem (if revenues from course sales fell year-over-year, don’t increase your course sales revenue budget unless you have a really clear understanding of why they fell).

Similarly, make sure you build in a buffer for the unknown. If you’ve only had a certain expense for one year, you might want to inflate it a bit in your budget since you don’t have several years of data to base it on.

Also remember to incorporate in the costs for any new initiatives or projects you are working on, as well as any life events that may derail you for a bit. Planning on hosting in-person events? Don’t forget to factor in liability insurance and bartender costs. Are you having a baby, getting married or moving? Factor in the time off, additional stress and increased costs as you project your realistic revenue for the year.

And as with everything else, don’t do this all in one day. Schedule some time to plan for the next year and then revisit it several times before you “finalize” everything. Personally, I like to block out the following schedule:

  • 1st Day – Financial Clean-up
  • 2nd Day – Financial Review
  • 3rd Day – Current Business Assessment (sometimes broken into 2 days depending on the number of people involved in the conversation and the complexity of the business)
  • 4th Day – Strategizing + Goal Setting
  • 5th Day – Budget Prep
  • 6th Day – Review Strategy + Goals and make adjustments as needed
  • 7th Day – Review Budget and make adjustments as needed

Ultimately, find the schedule and the process that works best for you and your team. But don’t neglect the important steps – review and understand where your business is currently at, how it’s progressed from the year before, what the strengths are that are moving you forward and identifying the areas for improvement that are holding you back. It’s not always a fun process, but making this a priority for your year-end every year will ensure you start off the next year on the right foot.

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