What you should be doing in the Fourth Quarter

The last three months of the year represent more than just the last quarter of your fiscal year – they should be a time for strategic planning and consultation with your management team to determine where you are and where you need to go.

You want to get an idea where you’re going to end up at year’s end: how close are you to budget (if you have one), and can you affect the results in any way by year-end; what are your tax implications projected to be, and can those be improved upon in any way? In addition, you also want to be thinking about next year – and even beyond – to create a roadmap for your business.

Look at your current year-to-date operations against budget. Are you on track to equal or exceed the revenue you projected? Are your expenses in line with what you wanted? Compare your performance to the same time last year to see if you can spot trends or identify holes in your operations, or in your budget.

Try to predict where you’ll end the year. Are the trends to-date positive, or is business beginning to slow down? Use the trends from the first three quarters to make a forecast for your year-end results.

If you start thinking about this in September and October, you may have time to make adjustments. Can you can set more aggressive sales goals for the fourth quarter to boost revenue, or can you put the squeeze on non-essential costs to come in under budget on expenses?

Once you have a better idea of where you expect to be on Jan. 1, start thinking about your tax situation. Now is the time to make adjustments that might optimize your tax goals. If you just hand off your year-end documents to your accountant after the first of the year, there is very little he or she can do to improve your situation. If you start looking at your tax position months in advance, however, you have time to start setting aside cash and/or make moves to improve your deductions.

How do you start making those important long-term decisions? How do you strategize and plan for the years ahead?

Even as you’re winding up the current year, you should be thinking about next year’s plan. Is the company growing or just holding steady? Do you expect or require any major purchases or capital improvements next year? Do you foresee any changes in your financing or shareholder structure?

If you start planning next year’s budget now, you’ll not only enter the new year prepared, but you will probably uncover some strategic ideas you need to investigate. In addition, you and your accountant can make smarter financial decisions on the size and timing of major financial moves, which can have significant tax implications at the end of the year.

But one year is not enough. You should be thinking about three to five years out, updating your business plan and vision at least annually. How big do you want to be in five years? How will you be structured? How much market share is feasible? Where is your financing coming from? How will you deliver value to your shareholders and stay current with your lenders? Think too about non-financial goals: What is our mission and reputation? How do we maintain quality and deliver customer service?

These are the three elements you need to have as your year closes: Where are we now? Where will we be next year? And where are we going in the future?

The fourth quarter is your time to re-think, re-plan and re-energize for the year to come, and years after that. If you do this now, while there are still a few months to go, it will pay off for you. If you wait until December, or worse yet, after the start of the new fiscal year, it will be too late to make important adjustments and enter the new year with a thoughtful and sustainable plan. Then… do it all over again next year.