How to prepare your business for 2024

This year presented some challenges for small businesses, even as the economy got stronger overall. You’ve likely faced inflation issues, rising interest rates and ongoing supply chain problems — but you made it through. Whether this was your first year in business or your fifth, now is the time to review and prepare for next year, learn from your mistakes and keep those successes coming. Here are seven ways to help ensure you keep your doors open in the future:

1. Know where you stand

The end of the year is the ideal time to assess your financial picture in detail. By creating a profit and loss (P&L) statement, you will have a clear understanding of your revenue, expenses and net income.

• Revenue: the total of your sales
• Expenses: all costs associated with conducting your business
• Net income: the amount of money that remains after subtracting the total of your expenses from your revenue

To stay aware, you will want to create a P&L monthly, quarterly and annually. While you can create your own P&L spreadsheet, you’ll have a much easier time doing so if you invest in accounting software developed specifically for small-business owners, such as QuickBooks Online and FreshBooks.

2. Pinpoint what worked

Step back and look at not just everything you’ve spent and earned over these past six months, but also the business decisions you’ve made. These can include the people you may have hired, website changes you may have made, and new marketing strategies you may have tried.

When you see all of these details laid out, you should be able to identify everything you like and what has been worth the money you spent. Make a note of the decisions that are paying off and maintain them for now. Business is not static, so you’ll want to remain flexible.

3. Acknowledge the failures

This is crucial. Odds are you spent money on something — or perhaps many things — that were unsuccessful. That’s OK — it’s all part of the learning curve (one that never stops). As you assess these situations and start making new decisions, try to do so as objectively as possible. You might feel personally attached to a certain plan, but if it’s hindering your business, you might have to decide to let it go.

For example, if a product in your lineup is underperforming, maybe it’s time to reevaluate your marketing strategy or think about pulling it off the shelves. If the publicist you hired to drum up social media attention didn’t result in the promised financial effect, reassess and consider parting ways. Pare down unnecessary expenses and try to operate as lean as possible, without sacrificing the desired outcome.

4. Check your credit

This is the perfect time to pull your consumer credit reports and review your credit scores. You’ll want to make sure everything you see is accurate and the numbers are high. Ensuring that your credit remains attractive will be crucial to protecting your upcoming financing opportunities.

If your business credit history is already established, check your business credit scores from Dun & Bradstreet, Experian or Equifax to see where you stand. In addition to your company’s banking and credit history, business credit scoring models input information such as:

• Company ownership structure
• Company background
• Liens associated with your company
• Past bankruptcies or bankruptcies currently filed

This information makes your reports different from consumer credit scores that only focus on your credit activity.

Be aware, though, that if you’re a sole proprietor, the health of your personal and business credit intertwine — which means you need to keep both in a healthy place by paying all obligations on time and maintaining a low credit utilization ratio.

5. Plan for financing

If you don’t already have a business credit card, explore what is currently available. Credit cards are essential tools because their credit lines will give you the flexibility necessary to manage routine costs, as well as pay for the surprise expenses that inevitably arise.

Just about all of these accounts are equipped with generous rewards programs, too, so you can earn cash, points or miles as you charge. Many also offer 0 percent introductory APRs for a year or more. If possible, consider getting prequalified or preapproved from card issuers you’re interested in. Using Bankrate’s CardMatch tool is an excellent way to get prequalified from multiple issuers at once. Once you’ve gotten offers that you have a high chance of getting approved for, you can apply for a card that matches your business needs.

But a new credit card might not be enough for this year’s financing — you may also want to spend especially large sums all at once on aspects such as research and development, heavy equipment or electronics. That’s where business loans come in. They’re excellent for the large costs you want to pay off over time (often three or five years) and in fixed installments.

If you want to better understand how a loan might impact your finances, check out our business loan and interest rate calculator.

6. Be tax savvy

Being a business owner means you have to manage your taxes carefully so you don’t overpay or underpay. Rather than just having the money deducted from your paycheck, you’ll have to estimate and plan ahead for quarterly taxes.

However, if you use a credit card for business expenses and roll over the balance from month to month, you may get a break on your income taxes. If you use the card for qualified business purchases only, the interest is tax deductible, which is all the more reason to get a business credit card and use it exclusively for your venture. If you get a business credit card that includes accounting software integration, you’ll also get the added bonus of keeping those expenses nice and organized, so your taxes will be easier to manage.

Regarding the rewards you earn from business purchases, you don’t have to worry about paying taxes on their value, since the IRS considers credit card rewards as a rebate, not income.

7. Dare to dream

What is your vision for your business? Does it involve expansion into different locations or rolling out new products? If you haven’t allowed yourself the luxury of dreaming of what you really want, stop and do so.

Like many business owners, you may be wrapped up in what you must do this week or month. Your mid- and long-term goals are vital, so think about what they are and write them down, with dates you hope to achieve them.

The bottom line

Planning out the year for your business doesn’t have to feel so intimidating — not when you have the right tools and guidance. By breaking down your finances, evaluating the major decisions you made last year and figuring out where you want your business to go from here, you’ll be well on your way to achieving your business goals. Depending on your financial situation, a new business credit card or business loan might also be part of the plan.

And don’t forget to take a moment to pat yourself on the back for keeping your business going another year. Well done!