As a financial planner, I believe in looking ahead, setting a clear destination, and creating a step-by-step plan to get there. When planning for next year, the time to start is NOW!
The start of the fourth quarter is the ideal to review your financials, plan for next year’s success, and identify areas where you can optimize operations and reduce tax liabilities. Why? doing this is the fourth quarter allows you begin executing immediately at the turn of the year.
Specifically, the first two weeks of January are among the most valuable of the year and often wasted. While everyone else is setting and abandoning their new year’s resolutions, you’ll be busy executing your plan. This is a huge competitive edge!
Whether you’re a business owner or work for a company or non-profit, having a plan in place gives you a competitive edge. Here are a few key areas you can start working on now as we roll into Q4.
Reviewing your financials at the beginning of Q4 allows you to take stock of your company’s performance over the past nine months and make informed adjustments before the year ends. If your expenses have unexpectedly increased in certain areas, now is the time to explore why and determine whether costs can be trimmed or renegotiated. Similarly, if your cash flow is tight, you’ll want to determine if capital is needed or if adjustments to spending are required.
This isn’t just about setting a budget—it’s about taking the time to reflect on your strategic objectives and laying the groundwork for achieving them. By waiting until the new year, you risk being reactive instead of proactive, which often leads to missed opportunities and misallocated resources.
Alongside planning for growth, it’s equally important to consider where your business might be able to achieve financial, operational, and tax efficiencies before the year ends. From a financial perspective, this might mean revisiting your debt structure or inventory levels. For instance, if you have high-interest debt, now is the time to explore refinancing options or to consider paying down that debt while rates are becoming more favorable.
If your business deals with inventory, conducting a thorough review ensures you aren’t tying up valuable cash in overstocked items that aren’t selling, or, conversely, missing out on sales because of understocked products with better marketability and margin potential. Related to this is auditing vendor relationships, as there may be opportunities to renegotiate contracts or seek out better pricing and terms.
Lastly, from a tax perspective, there are several opportunities you’ll want to explore before the year ends. Taking advantage of tax-loss harvesting, for example, can reduce your overall tax liability by offsetting gains with any losses your business may have incurred. Furthermore, maximizing retirement contributions for both owners and employees not only helps secure long-term financial security but also provides significant tax benefits in the short term.
Additionally, if you’ve been considering making capital investments, such as purchasing new equipment or upgrading technology, doing so before December 31 could allow you to benefit from deductions like Section 179, which can have a meaningful impact on your tax obligations. However, it probably doesn’t make sense to reduce cash flow by purchasing equipment just for the tax deduction. A conversation with your financial planner and tax professional can help you make sense of the timing of investing in new equipment.
Don’t let the year slip away without taking action! The decisions you make now will define your personal and business success in 2025. Start reviewing your financials, optimizing your operations, and planning for the future today.
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Author: Dale Shafer II, CFP®, CBEC®, APMA®
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