5 Tips to Help You With Your End-of-Year-Planning
Congratulations, friends! We’ve made it to the end of the year!
At press time, we had just over six weeks until the end of 2021, which means it’s time to start your end-of-year planning.
Huh, do you hear that? Is it the awkward silence of someone who’s never done end-of-year planning?
While it’s an important part of goal-setting and growing your business, the truth is a lot of shop owners just don’t sit down and plot out the next few months. We get it—you have a zillion other things to do, not to mention the holiday craziness that inevitably accompanies the end of November and, well, all of December.
But have no fear: Fullbay is here! We sat down with Co-Founder & Executive Chairman Jacob Findlay and Director of Finance Robert Gilbert to learn more, and they helped us put together some easy-to-follow tips that will make your end-of-year planning a snap.
Why is end-of-the-year planning so important?
End-of-year planning is important to making sure that you have a strong finish to the year. It generally starts at some point in the fourth quarter, but it isn’t just about charting a course for the next two months. It involves sitting down and reviewing the last year, then making plans that will help you get the next year off to a great start.
In other words, it’s hard to figure out where you want to go if you aren’t sure where you’ve been.
Tip 1: Get the finances in order
As we mentioned above, you’re taking what you learned this year and applying it to next year. Did you have a financial plan for this year? If not, don’t worry; part of your planning ahead for the next year can include setting up those goals.
If you do have a plan, now is the time to compare how you actually did with how you wanted to do.
- Did you meet your financial goals?
- If you didn’t, where exactly did you fall short?
- Overall sales?
- Technician inefficiency?
- Rent hike?
- How can you make up for that?
- Selling more parts in the next year?
- Working with your techs to help them be more efficient?
You’ll also use this time to set some basic goals and put together your plan for the coming year. If you haven’t done this before, think about things like:
- How much revenue you want your shop to drive
- Steps you can take to ensure you make that revenue
- Investments in employees or equipment?
- Get certified in new types of vehicles?
- Raise prices?
Tip 2: Invest in equipment, people, and tools
Before you do anything, make sure you speak with a tax professional. We can provide some general advice, but only you and your accountant knows what you can or should be doing come tax time.
With that said, if you have the extra capital, the end of the year is an excellent time to purchase equipment or shop management software. You can also do some hiring.
Why? Because many of those expenditures will be tax deductible this year. That can mean less money sent on Uncle Sam and more money invested into your shop. Think of it this way: if you are going to have $100 in taxable income this year and have to pay taxes of $10, then why not spend an extra $100 this year on a tool (like Fullbay!) or anything that your shop needs and save the $10 in taxes.
It makes that $100 purchase more like a $90 purchase because it was tax deductible. Now you have $0 in taxable income and don’t have to pay $10 in taxes.
But if you wait until the beginning of next year…you’ll send Uncle Sam $10 and still have to buy that tool for $100. This same concept applies to hiring new employees and almost any purchase for your business.
Tip 3: Count your inventory
We probably don’t need to tell you that you should be doing inventory counts throughout the year (or maybe we do), but you should definitely do one for the end of the year.
- Do you have less inventory than you expected? Uh-oh. If you can’t find those parts, it’s likely you basically gave them away instead of charging for them.
- Do you have more inventory than you expected? Also not great, because there’s a hiccup in your tracking somewhere.
Given the current parts shortage, this is also a good time to sit down with your parts manager (if you have one) and review what type of parts sold most, what you had the hardest time obtaining, and more. This can help you forecast what types of parts you’ll want to keep on the shelves in 2022 and what you can order as-needed.
Tip 4: Keep up with taxes, retirement accounts, and more
Did you make any improvements to your shop this year? Depending on what they are, some of them may qualify for accelerated depreciation. Even if they aren’t, they may qualify as a tax writeoff.
The CARES Act of 2020 let businesses defer employer taxes from the time it was enacted until the end of 2020. Now those deferrals are due and to be paid back, with half due by December 31, 2021, and the other half due December 31, 2022. If you haven’t paid the employer portion of these taxes, make sure that you do so that you don’t incur any penalties for paying late.
This is another good opportunity to chat with your accountant about things like IRA contributions, SEPs, HSAs, and more. Many of these can help you find ways to invest money pre-tax so that you won’t have to pay taxes on that income for this year.
Tip 5: Don’t forget to run the shop
The end of the year coincides with the holiday season. Maybe it’s the same-old, same-old for your shop, but you might also have a rush of PTO requests to match the sudden influx of fleets trying to bring their trucks in for maintenance or repairs (hey, they want the tax benefit this year, too).
Here are a few additional tips to help make the end of the year a little smoother:
- Get your holiday calendar set up early. If you aren’t shutting down entirely for a few weeks, remind your employees to get their time off requests in early, if possible. This lets you schedule ahead for coverage.
- Handle other staffing issues. If you provide yearly reviews, this is probably around the time of year when you need to get started on those. You might also look into what vendors you’re using (for parts and things like coffee and snacks) and see if there are better options.
- Make any last-minute marketing efforts. This time of year coincides with the depths of winter in some states—perhaps send out a coupon in your newsletter that knocks a percentage off the price of any truck that comes in for, say, winterization.
You’ve got this
Benjamin Franklin once said, “If you fail to plan, you plan to fail.”
We believe him. A commercial repair shop has a lot of moving parts, and like any machine, those parts will need tending now and then. But how can you tend to them if you don’t actually make the time to look at them?
Think of your end-of-year planning as a sort of preventive maintenance for your business: it’ll show you what parts are holding up and what you need to repair or replace to prevent a breakdown.
You know what’s good for preventive maintenance? Fullbay. It also makes your year-end planning a heck of a lot easier by putting all of your shop’s information at your fingertips—you know, saving you from digging through boxes, drawers, and pockets for receipts, spreadsheets, or other crumpled bits of documentation.
Oh, and it falls under tip #2. When you get Fullbay, you’re investing in software for your shop. That’s a business expense. So go reduce your taxable income and set yourself up for success through the end of the year—and beyond!