Year End Leads To 2021 Business Planning
Michael Lodge, NCPM, CRTP - Nationally Certified Professional Mediator - Business Advisory - www.lodge-co.com
Today is December 1, 2020 and if you have not started to think about how you are going to end the year and start planning for the next year - 2021 - you are behind schedule. Business planning is constant and needs to be done daily. So, let us keep it simple for the small business. With everything going on, new President (maybe) and with COVID-19 creating a lockdown on businesses, we have to look at our business lives differently.
A lot of us were shut down, locked down, by government for too long. In fact, we should have never been put on lock down. So, the priority we must put in our mindset and business management is never let government lock us down again. Even to this day, those of you in states with crazy governors who are trying to lock you down again, do not let them, fight back. 60% of small businesses went out of business in this past lockdown across the country. So as businesses, we must ban together and fight back - lockdowns kill off too many businesses. Number one rule - no more lockdown!
It is now the end of 2020 and I would suggest that all of you start looking at your tax situation. Are you caught up on federal and state payroll taxes? Do you need to sit with your tax practitioner and make sure that you have paid enough taxes throughout the year or do you need to pay some in the last quarter, in December to cover taxes. Or have you had such a loss and you need to get some advice from your tax practitioner on how to handle the loss on your final financial statements and that is carried over to your tax return. Know the rules if there is an ability for any loss carryovers through your state or federal business taxes. Know what your financials are going to say for the year end of 2020, and then be prepared to tell the story as to why you are in the spot where you are now.
If you are or are shutting down your business, there are several things that you must do. Make sure you have successfully dissolved your business entity within the state you are operating in. Make sure all your taxes have been paid in full or worked out a payment plan with the state and federal. When you go to prepare your tax return make sure you tell your tax practitioner that this will be your final tax return for the company and that you have dissolved the business with your Secretary of State and provide him/her with the dissolution papers from the Secretary of State. I know this is hard to do but please stay in compliance so that more interest and penalties stop. If you are a sole proprietorship, make sure you tell your tax practitioner that this will be your last year filing a schedule C and if there is any item being depreciated how will you handle that on your personal tax return. Even though you are closing the business it is important to remain in compliance on how to shut down a business.
2021 needs planning. Your strategy on how to run your business must change. Plan for the worse and begin making the correct changes in staffing and reducing costs. However, I suspect that all small business has had to do that already because of the lockdown hit on businesses. You are already probably running mean and lean already. However, 2021 needs some decision making to make sure you make it through the new year. Here is my piece of advice - for the next four years, run your business as conservative as possible. It is political. If the United States Senate is controlled by the Democrats because the Republicans lost the senate from the runoff in Georgia and the loss of two Republican Senators, we have a tax issue. In 2025 all the tax incentives for personal and small business will expire. But if the Democrats take over the Senate those tax breaks will disappear fast because now Biden can push through the tax increases, he said he would do sooner. He will have control over the Congress and the Senate, and he can ram new taxes through the system and take away the Trump tax incentives. Yes, sometimes, a lot of times, what happens in Washington D.C. affects our businesses. As I have said, run your businesses conservative for the next four years as we sit in limbo waiting to see what will happen through the new administration. Be a financial conservative.
Every business, right now in the month of December 2020 should be taking out their journals and beginning putting your business strategy on paper, by hand. Explore what you can do to increase sales and at the same time keep operating costs level and lowering them. Talk to your people around you, study the market for your industry, but come up with some new ideas on how to grow your sales. A lot of people tell me that their expenses keep going up, but when we look at their financials the truth is that their income has dropped. So, the question should always be, how, what do I do to increase the sales. Also remember when you increase your sales it does not mean you have more money to spend. You should be building a cash contingency fund for emergencies. if there is a dip in the economy (suspected to be) plan for it so you have cash available for that type of emergency. Or if a machine breaks down you have the cash to repair it. Build up a cash emergency fund for the "Just in Case" issues that may pop up.
Start looking at the staff you have and who adds value to the business. And if you have someone that needs help can you mentor that individual to become better at their job instead of having to replace him or her. When you do hire that sole question to be asked is, does this person bring value to this company. Value added employees are vital for 2021. And then ask yourself, are you adding value?
One of the biggest expenses to a company is when there is conflict in the company. Conflict is awfully expensive. Conflict creates a situation where employees do not know what to do. They are caught in the middle and then their productivity reduces or even stops. Employees are unsure who to support, they lose focus on their responsibilities because the conflict creates a division. Conflict can be awfully expensive and if you do not get the conflict resolved it can cost you greatly. Not just financially but also the respect of those that see you as their leader. If you have conflict, hire a workplace mediator to come in and help resolve the issue. If you try and mediate it there may be a problem, but a third-party mediator who is independent can help resolve these expensive conflicts. The biggest expense in any business are the staffing costs and when conflicts are evident those staffing costs double because no one is being productive. Resolve conflicts quickly.
In the next few weeks, take your journals, begin planning. Without a plan you have nothing. When you do have the plan then tell your staff of the plan, so they are walking on the same business path as you. Communication in 2021 and asking for new ideas is going to be vital for any business. No, I should say to all businesses. I love my journal; I write in it every day. I change my weekly plans all the time because things happen throughout the year. But at the beginning of the year I always have a plan on how I am going to approach the year, my goals and expectations of the business, and the employees that I need to assign to new positions because their experience level is needed. I write in my journal daily about business, my conversations with clients and employees, and I review the day of writing at the end of the day. Write daily and record your decisions daily. The point is, plan for 2021 and write it down.
If you have any questions or need to talk about business, I provide a 60-minute business advice session to businesses. It is a 60-minute virtual time we spend together talking about business issues or even taxes. Go to www.lodge-co.com and book a 60-minute session with me.
Comments are closed.
FOR MORE BUSINESS BLOGS
Support our Podcasts, Vlogs and Blogs by buying me a coffee!! Click on the image below
Michael Lodge is a Nationally Certified Professional Mediator specializing in business disputes, as well as family conflicts. He has written three books and hosts an international podcast on IHeartRadio and other podcast media stations.