The end of the year has a funny way of making everything feel urgent. There are budgets to finalize, sales targets to hit, employee reviews to finish and a remarkable number of things that everyone has agreed can wait until January.
For business owners anticipating a major change in the next few years, I would add a few things to that list.
Whether you are considering a sale, planning to hand the company over to the next generation or preparing for another stage of growth, the decisions you make now will influence the choices available to you later.
Some improvements take years to produce meaningful results, which is precisely why they tend to get postponed.
Before you close out the year, here are five things worth doing.
1. Decide what you actually want to accomplish next year
Most businesses will head into January with a budget, revenue targets and a list of strategic priorities. Some of those priorities will look eerily similar to the ones from last January.
I would start by choosing one result that deserves your attention over the next 12 months.
If your goal is to sell the company in three years, next year’s priority might be reducing customer concentration. If you want to step away from daily operations, perhaps the coming year needs to be about developing the person who will eventually run the business.
Choose something that will materially change the company’s position. Then identify the work and weekly commitments that need to begin in the first quarter.
2. Find out what your financial statements aren’t telling you
Most business owners have a reasonable idea of how the year went. Revenue is up or down, profitability is better or worse, and they know whether cash has been tighter than expected.
Before developing next year’s budget, look more closely at what produced those results.
Take customer concentration, for example. If one customer accounts for 30% of your revenue, that relationship probably deserves some attention. A long history together is reassuring, but losing that account could still materially change the business, especially if that relationship is managed by one person.
The same scrutiny belongs on profitability. A company can celebrate record revenue while earning less money because its costs have increased faster than its sales. Understanding which parts of the business are actually generating profit gives you better information for deciding where to invest next year.
These are particularly important conversations for owners contemplating a sale. Buyers will have their own questions about the quality and sustainability of your earnings. I’d rather know the answers while there is still time to improve them.
3. Give your leadership team something to own, then hold them accountable
Look at every decision that landed on your desk over the past 30 days. Choose at least three that should belong to someone else on your leadership team, particularly decisions that keep returning to you despite having an experienced manager responsible for that part of the business.
Find out why you keep getting pulled into the process. Your manager may lack the authority or information needed to make the decision, or they may have learned that coming to you is easier than taking responsibility for the outcome.
Once you’ve addressed those issues, give them ownership of the decision and agree on what success looks like, when it needs to happen, and how you’ll track progress. Set a check-in date, and make sure they understand what they are expected to deliver.
This is where I see owners and founders miss an important step. They assign responsibility, assume the work is being handled, and later discover that very little has changed. Then everyone wants to know why the initiative failed.
If your manager hasn’t delivered, find out why and address it. Perhaps they need additional support, or maybe it’s time for a conversation about performance. What you don’t do is take the work back and start the cycle all over again.
If you plan to grow, acquire another company, or eventually spend less time on the day-to-day, you need people who can take responsibility for meaningful results. Give your team the opportunity to develop that ability, and hold them to the expectations you’ve established.
4. Have the conversation you’ve been putting off
This one may be uncomfortable, which is probably why it’s still on your list.
Perhaps you’ve been talking about retirement for years without discussing what happens to the business. Your presumed successor may have an entirely different idea of their future. Or you may want to acquire a competitor but haven’t asked your banker what financing the transaction might require.
Have the conversation before the end of the year.
I would also encourage owners anticipating a major transition to bring their professional advisors into the discussion early. Your CPA, attorney, wealth advisor and banker can offer valuable perspectives, particularly when they understand what you’re working toward.
There is an important distinction between telling your advisors that you might sell someday and telling them that you want to be ready to sell in three years.
The second conversation gives everyone something to work toward.
5. Get a clearer picture of what your business is worth
Business owners can spend decades building a company without ever getting an independent perspective on its value.
That may be perfectly reasonable if you have no plans to sell. It becomes more important when you are making decisions about retirement, bringing family members into ownershi, or planning for significant growth.
If you haven’t done so recently, I would make understanding your company’s current value a priority.
An initial valuation report can give you a starting point for understanding where the business stands and identifying questions worth exploring further. At Levy Co., we offer a valuation report that gives owners a starting point for understanding what their business may be worth, even if a sale is several years away.
The number itself is only part of what interests me. I want an owner to understand what could make the business more valuable over the next several years and how much work may be required to get there.
That information is much more useful three years before you want to sell than six months before you contact a broker.
Give yourself a head start
You don’t need to complete a major organizational overhaul between now and December 31. Most companies already have enough going on during the final quarter.
But you can make a decision, have an overdue conversation, or establish a priority that will put the business in a better position when January arrives.
If a major transition is somewhere in your future, the work you do next year should bring you closer to it. It’s that simple.
And if you haven’t decided what you want that future to look like, I’d put that conversation at the top of the list.
