As we enter the fourth quarter of 2017 it is important to focus on finishing the year well. While there may be various competing priorities in your business and many urgent matters requiring your attention, in the last quarter it is especially important to focus on the execution of those items which will maximize profitability. In order to maximize the profitability of your company and have a strong last quarter, some things to consider are:

Asset 131. Review the Year-to-Date (“YTD”) Financial Results

Determine your current YTD earnings relative to your “plan” for the year. Your plan is the company-wide budget or forecast prepared prior to 2017 – the specific goals to be met for the year in order to achieve the company’s long-term strategic plan. See September’s Topic of the Month on Strategic Planning. Your 2017 plan probably contains specific revenue targets for the year, forecasted net income, investment targets, sales volume goals, and so on.

The difference between your YTD results and the original plan for the year is basically what you need to accomplish between now and the end of the year. Is this realistic?

  • Based on your YTD results and conditions you anticipate in the last quarter, estimate what you think your financial results will be for the year. Recognizing seasonality, review the budget and projected cash flow to ensure that it accurately reflects what is expected in the last quarter.
  • Modify your plan (budget), if necessary, to focus on those items which will maximize profitability for the year. Consider what actions need to be taken in the fourth quarter to finish the year strong, and take the necessary steps to implement those actions.
  • Anticipate year-end expenses such as customer gifts, holiday parties and determine how much the company can and will spend.
  • Begin looking at year-end bonuses, if applicable, to determine the likely amounts and related steps to determine these.
  • If your business operates as an LLC or S Corporation, for example, your 2017 tax position should be considered to determine if any year-end tax planning may be required to minimize your current year taxes.
  • Firm up your company’s timetable for closing out the year-end financial records. Schedule the timing for your external audit, if applicable.

Asset 142. Maximize Customer Opportunities

The last quarter of the year is an excellent time to focus on your customers (clients), to ensure you are well-positioned to maximize your profitability for the year and to solidify your relationships.

  • Reach out to your best customers. Express appreciation for their business while seeking constructive input on your products/services. Think strategically about how and when you might interact with them over the coming months. Make a list of customers (clients) for company holiday gift giving.
  • Anticipate your client needs in the last quarter as well as any transactions to be completed before the end of the year.
  • Review aged receivables. Consider customers who may have payment issues and take appropriate action. It has unfortunately become common practice for some less scrupulous businesses to run up accounts prior to year-end and then to file bankruptcy.
  • Be mindful of your competitors and opportunities you may have to penetrate their customer (client) base – as well as your company’s perceived vulnerabilities that competitors may take advantage of and penetrate your customer (client) base.
  • Ensure you have adequate resources to respond to customers (clients) in the upcoming busy season, especially through the end of the year.
    • Review staffing needs in light of scheduled employee vacations.
    • Address inventory pricing and supply decisions that will need to be made relative to holiday sales activity. Decisions include additional orders, order reductions (both of these are limited time frame problems), price adjustments based upon sales activities, and advertising strategies. By planning these in advance, profitability can be maximized.

Asset 163. Make Effective Advance Preparations

As you look ahead to the last quarter and year-end, anticipate the business that will occur and take necessary steps to:

  • Ensure that customers (clients) will have what they need as they also anticipate their year-end.
  • Determine your staffing needs for the holiday season.
    • Be certain that employees are able to utilize their remaining vacation time, while also having sufficient staff on hand to meet clients’ needs. This is a good time to make and communicate decisions about the number of vacation days that employees will be allowed to carryover to next year. In addition, communicate the holiday staff schedule now so that employees can prepare.
    • Maximize productivity of staff resources by utilizing any “slow time” (if applicable) around the holidays to address specific items previously postponed, or to complete internal projects.
  • Schedule year-end performance reviews with employees. This will assist in determining employee remuneration for the coming year and year-end bonuses. These decisions need to be made early in the last quarter and communicated to employees in order to manage and monitor expectations, while maximizing productivity in the last quarter.
  • Consider necessary additions/changes in particular employee positions required in the last quarter of the year or early in 2018. Start the recruitment process well in advance of the last two months of the year when it becomes more difficult to schedule interviews and complete the hiring process.
  • Complete any business process changes in the last quarter so that the new processes will be fully implemented and in place for the start of the new year.
  • Consider any upcoming legislative or regulatory changes at the national, state or local level that will impact your business so that you have adequate time to plan and/or take appropriate actions before the effective date of any such changes.

Asset 154. Start Planning for 2018

After you have addressed the matters that will enable you to finish 2017 strong, you should also start planning for 2018. The 2018 budget preparation process should be started early in the last quarter of 2017 so that it is finalized well before year-end.

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