502: How To Prevent Your Construction Company's Yearly Cycle Of Chaos

This Podcast Is Episode Number 502, And It's About How To Prevent Your Construction Company's Yearly Cycle Of Chaos

The year is almost over. Fourth-quarter and year-end deadlines are approaching. Most construction business owners who reach out to us describe this as their "Year End Madness" to prepare their documents for the tax accountant. 

The end of the year tends to be chaotic for construction company owners, but it's an excellent time to get some extra housekeeping done for your business. If you're on QuickBooks, you can click the Help Menu; depending on the year and version you're using, you can access the Year-End Guide, which will show you how to wrap up your business year. It's not an easy process, but it's all worth it. 

Why? Because tax preparers will take what you give them - they don't have the time, and it's much work that you've paid for, but a good tax preparer will know how much you can save if you can track your money. Bottomline - pay your taxes right, but it doesn't have to be more than what you owe.

Since you have a few weeks left for December's statements, ensure everything from November back to January 1st is reconciled. Here are also a few things to catch up on:

1. Review your goals and Key Performance Indicators

A lot has likely happened for your construction business over the previous 11 months. The end of the year is the perfect time to look back and see how your performance is stacked against your goals.

Consider your KPIs and review how you did. Be honest with yourself. If you didn't make your goals, that's okay. Now you can look at what went wrong–or right–and adjust accordingly. Were there surprises that affected your business? Could you prepare more for slower times? Did you take on too much all at once?

If you met or exceeded your goals, take some time to celebrate the achievements.

2. Review your business plan

Seeing how reality compares to your original business plan is always surprising. Allow yourself to evaluate how you're doing and see if your construction business is becoming what you hoped it would.

If it isn't, ask yourself if your goals and vision have changed or if you haven't been focused enough on them. It's okay to adapt your dream as your business evolves and you understand the market better, but make sure the change is one you intend to make, not one that's happened unconsciously.

3. Reconcile accounts receivable

Unpaid invoices are often one of the biggest disruptors to cash flow. Check if you have any outstanding accounts and remind those clients to settle before the year ends. It also doesn't hurt to double-check if you have any amounts owing to your suppliers and pay those.

4. Catch up on expenses

This is especially important if the end of the calendar year also marks the end of the tax year in your location (as I would like to remind our readers from outside North America), but it's a good practice for anyone. Ensure you've accounted for any eligible business expenses by year's end to stay up to date for tax season.

5. Verify vendor or client information

You already know that your business has changed for the year. The same is true for all the other companies that you work with. Take some time to ensure you have their correct information and are aware of any changes to their business terms.

6. Review subscriptions

It's easy to let subscriptions fly under the radar, but they quickly add up. Review your active subscriptions and cancel any that aren't relevant anymore. It's easy to get more money in your pocket, and it's fun to choose some new ones for the new year that better meet your needs.

7. Send out year-end letters

Put together a year-end letter for customers or clients and another for employees.

Let your clients know what you've been up to over the year, share some of your milestones, and let them know how much you appreciate their business. Highlight any community events that your business was a part of. It's an excellent way to stay in touch and keep yourself fresh in their mind for when they may need your services in the new year.

Thank your employees for all their hard work over the year. Call attention to your successes and celebrate all that you've achieved. It's a great way to provide recognition and highlight the most important events of the year.

8. Consider end-of-year gifts or bonuses

The end of the year is a terrific time to reward employees for a job well done. Even if you have an established bonus program, it's always nice to surprise employees with a gift. It's a personal way to say thank you and tell them how much you appreciate them.

Final thoughts

The end of the year is notoriously busy, and the holidays make it even harder to get things done. However, it's a great time to reflect on and celebrate your accomplishments. You'll be glad you did when the new year rolls around, and you feel like you've wrapped the year up in a bow – ready to take on the next one with a sense of renewal.

If you are still asking yourself the $64,000 questions: What about this and that? Have I met my goals for this year? What should I do for the balance of this year? What are my plans for the start of next year? Should I start now? Should I wait? I can't decide! - It is time to start fixing those loose ends now! The reports are only as good as the data received. Contact me to discuss your needs. If you don't know the answers tell me as much as you can, and I will do my best to "fill in the blanks."

About The Author:

Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com