If you own a small business, this summer might be a good opportunity to take some time out of your schedule and analyze your performance. With the first two quarters ending, you’ll be able to see how your business performed during the first half of the year, and you can make some important evaluations. Here are the five things you should do before the third quarter gets into full swing.
- File Your Taxes if You Filed an Extension
If you filed an extension for your taxes, it’s time to get them done. Business returns are due by September 15th, and individual returns are due a month later. It’s better to file your return early, because if you need to scramble to meet an IRS deadline, it limits important options that are available to you.
At WMGNA, we recently worked with a couple who divorced in late 2015. The wife was the business owner, but the husband was the one with responsibility for the family’s finances. The divorce caused major problems for their 2016 taxes, so each one of them filed an extension on April 15 of this year. The wife’s business had nothing to do with the husband’s taxes, but his financial situation was affected nevertheless. We are working with both to make sure their returns are filed this summer and not later.
The IRS imposes significant penalties for missing a deadline. Don’t take the summer off and try to file at the last minute.
- Schedule a Half-Day Meeting
A business is only as successful as everyone on the team. Plan a meeting with your employees and solicit honest feedback from them. The meeting should be planned for half a day—10 am to 3 pm is a good slot. Put it on your calendar and try to hold it off business premises if you can. Although the meeting may cost your firm in the short term, in the long term it will pay dividends.
Bring as many employees as you can to this meeting. A receptionist who meets with customers daily, for example, may have valuable feedback.
At the meeting, you want to take a hard look at your performance in three key areas: operations, finance, and sales/marketing. For operations, you can scrutinize equipment, computer hardware and software, whether you own or rent. Is there anything from 1983 that you’re still using? Maybe it’s time to make some updates.
For finance, you want to look at the business’s performance on paper. What does your revenue look like? What is your cash flow projection for the second half of the year? Do you have money for strategic opportunities?
In sales and marketing, look at the metrics you’re using. What would you like to be doing that you’re currently not? Is there anything that hasn’t worked for you?
Instead of working at the business, take a half day off and work on the business. It can be a springboard to more robust analysis.
- Review Your Investments
When the stock market’s second quarter concludes, it’s a good time to rebalance, update, and maximize your investment portfolio. Look at your cash position, emerging market and large-cap investments, and any special strategies you’re using. Make sure your brokerage accounts are in line with your model allocation. If you don’t have a model allocation, be sure to develop one that is diversified appropriately.
Try to incorporate tax strategies into any trading you do, and remember that there is no legal or patriotic obligation to pay more taxes than the government requires. Consider using tax loss harvesting for any investments that haven’t performed well, but be cautious with selling too many underperforming assets. Research in behavioral finance reveals that the human tendency is to sell a loser and put the proceeds in the winner. This of course is the opposite of what you want to do.
Also, don’t forget the tax deductions you can take for retirement plan contributions. Make sure you’re maximizing the benefits the IRS gives you for contributing to your employees’ 401(k)’s and other retirement plans. Remember: the more you save on taxes, the more you can invest in your business.
If you have multiple investment accounts, try to consolidate them. Managing a business is easier if you can dejunk and simplify some of the inevitable bureaucracy. Less paper is simpler, so switch to electronic delivery of documents if you can.
- Compare the First Half of 2017 to the First Half of 2016
Look at the first two quarters of this year, and see how your business has done compared to the first half of last year. Revenue, earnings, and expenses are good items to examine. Are there any adjustments that need to be made? Do you see any events this year that could bring changes by the end of the year? Evaluate your tax situation and see how it compares to last year. Also take note of any significant one-offs that have been made this year so you can make an accurate comparison to 2016.
- Don’t Forget Yourself
Don’t become so overloaded with work from your business that you forget to take care of your health. Both wealth and health are vital and symbiotic, so a balance between the two needs to be achieved. The world’s wealthiest and most successful people are more concerned about their health than the overall population. They take time out of their busy schedules to work on their health and stay fit.
Studies show that stress can lead to all sorts of health problems, including both weight gain and heart disease. And if you’re running a business, chances are you’re under stress. You want to be healthy enough to enjoy what you have earned.
WMGNA advisors work with their clients to achieve not just a portfolio return, but the lifestyle they want to live. Remember that money is a means to an end, not an end in and of itself.
The hardest part to getting started on an exercise schedule is simply getting started. Make it a weekly habit, if not a daily routine, to get some exercise and eat a healthy diet. Summer time is upon us. Try to stay fit and enjoy the weather.
Your business and your life are worth spending time on. Make a plan to accomplish all five of these proposals. The results will be a more efficient business and a healthier life.