You planned when you started your business, but business planning is imperative. It requires continuous monitoring, tweaking, and improving with each business cycle. What does this mean? What’s a business cycle? Here’s a quick rundown on business cycle planning and why it’s especially important for small business owners.
The 3 Primary Business Cycles
The fiscal cycle is your business’ 12-month period in which all transactions are accounted for. This 12-month period does not necessarily need to be the standard calendar year. The IRS defines a fiscal year as 12 consecutive months ending on the last day of any month except December.
The tax planning cycle is your business’ 12-month period in which all taxable income is accounted for. This can be a standard calendar year or a fiscal year.
The economic cycle refers to economic fluctuations between periods of expansion and contraction. In layman’s terms: the ebb and flow of economic activity affects business operations and should be accounted for.
How to Intentionally Plan Around Business Cycles
When the going gets rough, savvy businesses go through less “pain” because they have a contingency plan. They also experience greater success during high seasons. Here are two reminders when planning around business cycles:
Plan your fiscal year accordingly: You might wonder why companies choose different fiscal year-ends. The main reason is because different industries fluctuate at different times. A professional accountant can advise and help you plan for success.
Budget planning is a must: You should be regularly analyzing reports to see what your numbers are telling you. Just as with tax projections, you must look at the year before to plan for the year ahead. You can’t just go with the motions.
What Kind of Accounting Support Do You Have?
Dedicated accounting support can help you transform your small business by optimizing your spending and improving your company’s overall financial health. SMG has different levels of accounting support for every business. A popular offering is our Bookkeeping Bootcamp, a group membership DWY (Do it With You) service that offers professional support, accountability, and knowledge at an affordable monthly rate.
If you’re not sure what level of support you may need, consider scheduling a free clarity call with our team. We’re ready to help take things up a notch!