End of Year Planning: Expert Tips for Preparing for 2024

With the fourth quarter well underway, planning for 2024 means taking a look back at 2023.

Assessing Performance 

First, business owners should consider their key performance indicators (KPI). Comparing industry benchmarks, as well as the company’s overall performance, can help management identify missteps or opportunities. In addition, comparing a company’s actual performance to its budget helps management identify where there may have been unexpected changes. 

“There may be some financial ratios that really highlight areas that management should focus on,” said Jerry O’Doherty, audit partner and Omaha office market leader for Eide Bailly. “For instance, certain liquidity ratios tell management about their ability to meet short-term obligations.”    

Business owners should also take a look at their marketing KPIs and set goals for 2024.

“Looking at metrics, how marketing efforts performed, increase in sales, decrease in client/customer turnover, and overall reactions to marketing efforts should all be taken into consideration at the end of the year,” said Angela Chaney, partner at Pixel Fire Marketing.

James S. Bowen, president of Five Nines, which provides managed IT services, noted the importance of assessing the performance of equipment to ensure a business can continue to streamline its operations.

“For our part, being in the technology space, even something as seemingly simple as an IT budget for next year takes a lot of effort to do right,” Bowen said. “Everything that touches technology has a different lifespan. Your laptop, the version of Windows it is running, the wireless it is interacting with, and the switches that wireless is connected to — they all last different lengths of time.”

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Creating a Needs Assessment Plan

A business needs to start with a goal in mind, O’Doherty said. Once it has that guiding light, it helps identify what investment is needed to achieve that goal. 

 “If [the] goal is revenue growth in a people-driven business, the needs assessment would include identifying the number of personnel to hire,” O’Doherty said. “Capital-intensive businesses would need to look at the amount of machinery and/or space needed to increase production.” 

He suggested creating a projection of the amount of capital needed to achieve the goal. Once that is identified, management will need to determine the funding sources, whether that be through additional borrowing from a bank and/or equity infusion from the owners. He did caution, however, that business owners should be aware of rising interest rates.

If marketing goals have not been met, small businesses should consider either hiring a professional marketing firm or, if they already work with one, changing their strategy or choosing a different firm for the next year, Chaney said. 

“Goals should be set out at the beginning of the year in terms of marketing and, if they have not been reached, small business owners will know they need to make alterations for the upcoming year,” she said. 

Bowen said a way to determine an accurate budget for next year is to look back three years or more as well as forecast forward three to five years based on past decisions. 

 “As most small businesses don’t have full-time CFOs, this information and skill set is often hard to come by,” Bowen said. “I’m a big believer that innovation will happen as long as time is dedicated to it.” 

Bowen emphasized the need to set time aside to plan.

“Many businesses choose to do these planning sessions offsite because something seemingly that simple can make it easier for the participants to have the right mindset going into the strategy meetings and set aside their day-to-day worries,” Bowen said.

Five Nines starts its strategic planning process in the third quarter so that it can all be completed in time for finalized budgets in the fourth quarter, which takes into account the wants and needs of each department. 

The firm’s planning process starts with each department head presenting a SWOT analysis (strengths, weaknesses, opportunities and threats) for their function. 

“Preparing the presentation requires the department heads to dedicate the time to think about the overall needs of their department and our business from a higher perspective, and that is the big win here,” Bowen said. “After all the presentations are heard by the full leadership team, then we are in a better position to prioritize the most obtainable wins and consider budgeting for longer-term goals.”

Bring in Professionals

O’Doherty said that ideally, the development of the plan is a repetitive process. Once the business develops its projection, management should continuously update and improve the budget as more information becomes available. 

 “For instance, in California where they are raising the minimum wage for fast food workers to $20 per hour next year, those restaurants will need to quickly adjust pricing for when that becomes effective,” O’Doherty said.   

The various needs of the business will determine the right kinds of professionals to get involved. 

“Typically we see the most successful businesses have a very good working relationship with their CPA for financial and tax planning needs, their attorney for legal needs, their insurance agent for risk management needs, and their investment adviser to assist with net worth growth if there is excess capital generated by the business,” O’Doherty said.

End-of-year planning will ideally take place in October or November to give the business owner time to implement any needed changes before the new year. 

“In terms of marketing, a professional marketing firm can help a business owner look over their results from the previous year and help them create a needs assessment for 2024,” Chaney said.

Marketing is just one aspect of performance, but it is a crucial one. Small businesses that have an effective and strategic marketing plan in place can save time, money, and resources attempting to get and retain new clients or customers.

Finally, keeping in tune with industry trends will give business owners a leg up.

“Those that are asking questions and learning more tend to make the more informed decisions that help them navigate the ever-changing landscape in the business world we all live in,” O’Doherty said.