Oct 18, 2022

6 Reasons to Start Next Year’s Financial Planning NOW

6 Reasons to Start Next Year’s Financial Planning NOW

Ahoy there, mateys!

We’re in the middle of October, which means two things:

  1. Your writer starts rehearsing her pirate-speak in advance of Halloween;
  2. You should start planning out your 2023 financials, savvy?

But wait, Fullbay, you may be saying, it’s not 2023 yet? Why would I start planning anything now? I haven’t even broken into the candy corn yet.

Well, friends, it’s definitely time to get into the candy corn. Actually, go grab a bag right now so you have something to snack on while you read. But as for why you should plan ahead of time…well, we knew this question was coming, so we’ve framed this entire article around that question. In later posts, we’ll talk more in detail about budgeting and forecasting in the new year.

But for now, let’s really chat about why it’s so important to start early.

1. You can see how you did this year

Before you start on your 2023 financial plan, you should see how your shop performed in 2022. If you’ve been keeping good records (and, you know, following our suggestions about planning), then this shouldn’t be an overly long process. If you’ve got an accountant, sit down with them. If you’re the accountant, brew up some coffee to go with that candy corn and start reviewing your records.

It’s very difficult to set attainable financial and growth goals if you don’t know where you stand. By getting started now, you’re basically forcing yourself to look at how the current year went. It also gives you the chance to see what you need to do—or what you can do—in the last quarter to make sure you’re entering 2023 strong.

To that end, we encourage you to take a look at our sample financial plan. It’s simple, easy to follow, and if you haven’t been doing much with your financials so far…well, now’s the time to change. Remember, this isn’t just about recapping 2022. You’re also getting a final chance to clean up, improve, and otherwise change your destiny.

2. You don’t start out behind.

If you put off your financial planning until January of 2023, you’re already in the new year. You are behind. And you’ve possibly missed out on any tax benefits you might have been eligible for (such as buying new equipment towards the end of ’22).

“Your financial planning process can take anywhere from a month to three months,” says Fullbay’s Director of Finance Robert Gilbert—and that holds true for most operations, even smaller ones. Yes, a one-man band can possibly do this in a week or so. But, he cautions, “If you start too late, you’re still trying to close out the prior year, and those two things happening at the same time are tricky to manage.”

3. Set goals for next year

“[Good planning] lets you get your arms around your business in a really pragmatic way,” says Fullbay’s Co-Founder and Executive Chairman Jacob Findlay. “That becomes the jumping off point for setting your goals.”

And goals are everything! They give you something to work towards. If you don’t have goals, you’re just sort of floating in a sea of diesel, attempting to keep your head above the slick.

Some goals you can think about include:

  • Financial: “I want the shop to do $X (fill in the blank) in revenue per month.”
  • Staffing: “I want to get my technicians new certifications.”
  • Retention: “I want to give everyone raises.”
  • Growth: “I want to hire three new techs and get a lease on the empty building next to us and expand!”
  • Sales: “I want my sales and/or marketing team to bring in 30% more leads starting in February.” (Now’s a great time to look into Dieselmatic to really plan out your marketing!)
  • Personal: “I want to chill out in a hammock on the beach with a pina colada and only check on the shop periodically from my phone.” (Pssssst Fullbay lets you do this.)

You should also keep in mind core management and inventory management. Is your shop handling these matters the way it should? Can you improve on your current process?

4. Get ready for next year

Okay, Fullbay, you might be saying, I get it…but I still think I can do this all in January.

Hey, you do you. If you want to make more work for yourself at the turn of the year, be our guest.

But there really are things you should be looking at now so you don’t have to do them in January, or February (because really, if you put this off until January, why not put it off until February?).

Let’s go over just some of the items you should be looking at before the new year:

  • Equipment: Do you need a new lift? What about updated tools like shop management software (wink wink, nudge nudge). If you can swing it financially, now’s the time to bring in new gear and receive the tax benefit.
  • Personnel matters: Do you offer retirement accounts for your employees? What about health insurance? The latter usually undergoes some changes toward the end of the year as premiums and services are updated. You’ll want to keep ahead of that! And as we mentioned in the previous step, now is the time to look ahead to potential raises and promotions.
  • Insurance: You can’t always do much about insurance, But if you can, well, now’s the time.

5. Get ahead of industry issues

At the moment, there’s a lot going on in the industry that makes life difficult for repair shop owners. The tech shortage continues to loom. Shops continue to face challenges to get parts in. The Fed keeps raising interest rates—if you’ve got a loan, or any money out, you need to make plans to keep paying off those rising costs. And if you need to borrow next year, Robert cautions, it’ll be more expensive.

Retention is incredibly important. To that end, maybe you look into perks you can offer your staff to keep them around. That can include raises and bonuses, but also, Jacob adds, things like bringing in lunch every day or even providing childcare (or subsidizing childcare for employees). (Side note—kids are expensive. This may not be feasible for all shops, but if you have employees with kiddos, helping them get appropriate care for those kiddos can go a long way for morale and staff retention.)

6. Get ahead of the competition

There’s a reason we run articles like this every year: people still aren’t planning. We hear it in chats, in socials, even in conversations. Shops just aren’t on top of their financials like they should be.

Like…look, we get it. Financial stuff can be mind-numbing. Numbers, man. Ew. They don’t lie, and seeing them laid bare can make you confront how your shop is doing—and if you’re not doing well, that can be…well, pretty upsetting to see.

(This isn’t just a knock on diesel people, by the way. Lots of businesses don’t do a lot of financial planning and it almost always comes back to bite them in the booty.)

But if you want to run a successful operation—if you want to grow, and bring in more revenue, and maybe sell the place or at least take a long vacation—then you need to see what’s going on. And if you start a financial plan, and stick to it, then honestly, you’re already a step ahead of your competition. The smoother and more streamlined your business runs, the easier it is for you to swoop in and snatch up customers.

Hey, you snooze, you lose.

In closing, we hope you’ll start taking your financial plan seriously, if you haven’t already.

“Sometimes the significance is in the planning, not the plan,” Jacob says. It gives you the kind of comprehensive look at your business that you can’t get from anywhere else. And the better you understand your business, the more you can grow, the better you can do, and the closer you are to taking a long weekend off to kick back and watch Pirates of the Caribbean, savvy?

Suz Baldwin