As January quickly approaches, there are some important items to check off before next year is here. Following the national election and ongoing shifts in an uncertain economy, we’re here to help you stay ahead and avoid any unexpected changes.
“The days of setting 5- and 10-year goals for your operation’s purposes are gone,” says Justin Mentele, manufacturing advisor with Pinion. “The world is changing quickly, and the business environment is dynamic. Your strategy and oversight need to be just as dynamic.”
To help you prepare, Pinion advisors share three important steps you can take now to strengthen your strategy and financial standing for the year ahead.
A Year-End Checklist for Manufacturers
1. Understand your current financial position. From income levels to cost drivers impacting your bottom line – get a clear snapshot of your entire financial picture. Evaluate your performance against what was budgeted for both financial and nonfinancial metrics.
Pro Tip: Conduct a year-end review to assess whether you’ve met your financial goals, identify the factors that have influenced your earnings, and adjust your strategies accordingly for the coming year. For budgeting purposes, move to a rolling 12-month or rolling quarter basis to allow your company to be more agile.
2. Prepare for year-end business dynamics. What are you expecting to occur these last few months within the business? Examine your inventory levels, list out high-prioritizing expenses that need to be made in the next few months, and set a plan.
Pro Tip: Markets are unpredictable. Avoid surprises by understanding your leading and lagging indicators of revenue and cost movements. Establish Key Performance Indicators (KPI) that are meaningful to your business, not just the boilerplate ones that are generated by your ERP.
3. Ensure your investments are working for you. Are there better ways to use your money? “If you have a bunch of cash sitting in a low interest environment – you’re leaving money on the table,” shares Bailey Martenson, Pinion tax advisor. Take time to evaluate all your investments in addition to your business.
Pro Tip: Consider putting your money to work with mutual funds or a money market account. Money market rates are as high as 5.0%* right now. There are options right now offering higher interest rates with minimal risk and high liquidity. The key is in understanding the return you expect and diversifying your investments to be able to attain your goal.
“If you have a bunch of cash sitting in a low interest environment, you’re leaving money on the table,” states Justin Mentele, Pinion manufacturing advisor.
Looking Ahead for 2025
Don’t let the new year catch you off-guard. As 2024 winds down, check off these boxes to help you refine your strategies, optimize your financial health, and pivot with agility.
Connect with a Pinion tax advisor to walk through your tax strategy for the upcoming year.
