“The only thing that hurts more than paying an income tax is not having to pay an income tax.” – Thomas Dewar
April 18 is two weeks away, and while that may be great news for us accounting professionals, it may be a solemn period of self-reflection for sole proprietors, co-owners, and limited liability corporation owners. (Our C-Corp and S-Corp friends were supposed to have filed by March 15.) The numbers on your income tax return won’t lie. You’ve had to look directly at your company’s profits and losses and see true results from the past year’s worth of work. I can promise that, unless you embezzled a ton of money, it’s not the end of the world.
Here are some life lessons I can impart whether you’re in the black or the red.
Hey, you turned a profit! Congratulations! Take your employees, if you have any, out to a nice meal or night on the town and maybe enjoy a three-day weekend. When you return to your office, consider why you did well.
Do you have a standout salesperson? Did some thought leadership piece you published connect you with a new client? Once you isolate the reason(s) for the success try to replicate, improve or expand on it. Do it as financially responsible as possible and maintain focus on the strategy. Consult the people you trust; between your lawyer, accountant, peers, employees, relatives and network, you should get some honest feedback and quickly draft and implement a plan. By identifying and growing these strong points you’re likely to uncover new ones.
Trusting your instincts is the mark of a good leader, as we recently discussed. It may not guarantee success but it will maintain the momentum.
Obviously, no one wants to see that their business hasn’t profited in the last 12 months. Some might consider being in the red to be “just failure.” It’s perhaps more important to know why the numbers are so brutally honest to ensure history won’t repeat.
Did you hire new talent or launch an initiative that you expect to generate revenue or attention? Those people or programs take a little time to put up their numbers. If you didn’t take any risks or try anything innovative in the last year, and you were still operating at a loss, then make this the year where you do it.
It took Thomas Edison 1,000 attempts to develop a light bulb that worked. When asked about his “failures” he responded, “I didn’t fail 1,000 times. It was an invention with 1,000 steps.”
Having your business perform well and generate a profit is the evergreen goal. Make this the time to change strategy. Owners unwilling to take any leap of faith should not expect to magically land a new client or sale. You’ll either be in the same spot 12 months from now, or you’ll have to close shop.
As a business owner and one who advises those like me, I’m cautiously optimistic at best in this political climate. This is a pivotal time for most small businesses, and it’ll be even more evident when you see 2016-17 on a chart of your progress. Knowing how critical this time is in your company’s life cycle, make your company’s tax return your road map to lasting success, no matter how good or bad it may look now.
Contact Brinen & Associates to discuss your business’s plan.