The end of the calendar year brings a long to-do list for your business. And with all the typical hustle and bustle the last two months of the year bring, it’s best to start preparing for next year’s success as early as you can. 

Getting it right isn’t a perfect science, of course. There will always be challenges to navigate. Nearly all the businesses (94%) surveyed in a 2023 Federal Reserve study reported facing a financial issue during the previous year, ranging from the rising cost of goods to covering operational expenses and managing cash flow. 

If you don’t have a strong financial leader on board to guide your planning, it’s tough to know where your efforts to avoid these challenges will be best spent. But taking on these four action items can help you start 2024 off strong.

1. Create a forecast for next year.

You don’t have to create a full budget at this point, but a strong, accurate forecast can guide your decision-making on issues you’ll face throughout 2024. It will also help you set concrete goals for your business that will help you stay on track. 

What should you include? First and foremost, create an Income Statement forecast to help you get a big-picture view of next year’s finances by quarter. 

Be sure to consider any potential disruptors for your industry and for your company in particular that could have an impact on your forecast. Factor in any technology investments you’re likely to make — both their cost and the improved productivity or operational savings that could result. Creating a Balance Sheet forecast is also a critical step since some expenditures only hit your Balance Sheet and not your Income Statement.  

Building a forecast now is doing “future you” a favor — it’s a powerful tool for gauging your progress as you go next year. It can help you understand if you’re falling short in any areas — or if you need to double down on something that’s working better than expected.

2. Identify the key metrics you want to track.

The key metrics you should track will emerge as a byproduct of your forecast. They’ll help you check your progress against your roadmap and are indicators of your business’s overall health.

What are the most important metrics for you to focus on next year? Take a look back at 2023 and examine which metrics helped you guide your business well — and which you overlooked.

The metrics you target could be anything from the length of your sales cycle to inventory turnover to budget variance. It all depends on your business and where you’ve succeeded or struggled so far.

3. Evaluate where you want to invest in your business. 

Now that you know which metrics you want to focus on, use those to help identify where to spend in the coming year. What will help drive your business toward your goals not just for next year, but in three years or five years?

Whether that’s bringing in new equipment, adding key team members, or boosting your marketing efforts, making a long-term spending plan will keep your budget in check and keep you on the path to your goals.

4. Understand your potential tax liability for the current year.

More than a few businesses we work with, started with us because their tax liability took them by surprise, throwing their whole financial plan for the next year off course. 

Don’t find yourself struggling to recover from an oversight. Work with your financial team now to anticipate what your tax liability will be so you can properly manage your cash flow and spending for next year. 

And here’s a bonus tip: Don’t forget to make sure your 2023 books are in order (particularly the Balance Sheet) before the year is through. Starting 2024 off already behind won’t make for a happy new year. 

Plan now, succeed later

If you’re struggling to create a long-range plan for next year, you’re not alone. Many business owners have a hard time getting out of their day-to-day business operations to tackle big-picture strategy and long-range planning. That’s where a Fractional CFO comes in.

Our Fractional CFOs are experienced in guiding Kansas City businesses across a range of industries and can use their deep, varied experience to help take your business where you want it to go. Contact Mike DeMaio at [email protected] to learn more.