As you read this, hopefully all your clients have paid their invoices, your bills to vendors are caught up, and you’re swimming in greenbacks. Even if you’re living that ideal scenario, there’s still a good chance you’re haunted by a nagging question. What should you be doing to finish out 2016, and lay the foundation for next year?
Straighten Out Estimated Taxes
Let’s get the un-fun stuff out of the way. Uncle Sam always gets his cut. Whether you’re a conservative (c)(4) or not, the IRS is watching. For consultants not receiving a W-2 paycheck and those that own a passthrough entity like an LLC or an S-Corp, you owe estimated taxes. The most common way to cover those are through quarterly payments.
A huge problem for consultants is that we do better in even years than odd years. The taxman is like the honey badger – he doesn’t really care, because quarterly estimated taxes are based on prior year income.
Discuss with your accountant (and, yes, you better have a CPA) an alternative approach to estimated taxes that involves a switching look-back, or look-forward election each year. This can allow you — if your CPA recommends it — to pay yourself a one-time payroll where all funds are withheld as payroll taxes, thus avoiding the need to do quarterly payments based off revenue numbers from 2016 that most likely won’t be there in 2017.
Let me say this one more time: consult with your CPA regarding taxes and payments.
Reflect on 2016
The consulting world is always go, go, go. Rarely do we take the time to sit down and look back on a year, or cycle. But you cannot effectively plan for the coming year without honestly assessing the previous one.
Put a three-hour block on your calendar in the next two weeks. Here’s what you’re going to do during that time as you take notes, on paper with a real pen. Look at how much you traveled, how much time you gave yourself (exercise, reading, downtime, et cetera.), how much you invested in relationships, how well you did plan and schedule your days/weeks and what things you put time into that returned little to nothing?
Moreover, grab your personal bank records and assess: Where the heck your money went, five wasteful purchases, five darn good purchases and how well you did for yourself?
And grab your business financials and dive into: Cash flow, top clients, biggest expenses and cycle-over-cycle changes
Now look at your notes and honestly ask yourself, did 2016 met my expectations? What from the last year surprised you most? What was your biggest win personally? Professionally? Financially? How about the biggest disappointment? Did you achieve your goals (or did you have any to start with)?
This exercise can be cathartic and encouraging.
Set 2017 Goals
Once you’ve reflected, take an hour to write down what you want to accomplish next year. Focus on four main areas:
2. Personal finance
3. Personal health
I’ve found it’s easy to come up with tons of goals, and challenging to accomplish them. That’s why I recommended coming up with no more than eight goals for the year in all four areas combined.
Focus on goals for each quarter. A big goal, like landing 10 new clients for 2018, might require bite-sized steps each quarter. But a goal to exercise four times per week might only take two quarters.
Most importantly, set up a spreadsheet where you can track weekly progress toward your goals. As Ronald Reagan said, “Trust, but verify,” and that applies to self-management also.
Reexamine Your Expenses
Year-end is the perfect time to take a look at every single expense in your company. Here are several questions you need to answer in order to cut expenses going into a non-election year. What were my:
• gross-profit-to-labor-dollar ratios this year and in 2015? (This will tell you what staffing needs you will have and can afford in an off-year.)
• Do I really need office space or would co-working space work just fine?
• Was my entertainment budget productive to build relationships with prospects and clients or just a slush fund to keep me happy?
• Are my liability, E&O, and other professional insurance policies sufficient? (If you don’t have insurance, go get it.)
• Have I recently re-bid all my contracts and discussed pricing with all my vendors?
• What two recurring expenses could I get rid of today and not really miss?
And if you do nothing else mentioned in this article – get a budget in place and work hard to stick to it next year.
Politics is a people business. We may sell consulting, mail, digital, polls, field, or any other expense to a campaign, but it’s really all about people — those who pay us and those who fund them.
Ever wonder why you haven’t gotten that committee work you “deserve?” It’s most likely because you don’t have the same relationships as the folks who have that contract now.
Take this downtime to pick up the phone and call ten people. Thank your clients. Appreciate your vendors. Restart a relationship with a center of influence (COI). Cold call a prospect. It will pay off in spades, especially if you make this a weekly habit.
Build a list. Don’t wimp out and say you want to work with congressional candidates. Go get some actual names and contacts with those candidates, if not the candidate him or herself.
If you could have 20 dream clients, who would they be? There’s your first twenty.
You’ve heard the phrase “always be closing." Well, more importantly you should “always be prospecting.” The second you stop reaching out to future clients is the moment your business plateaus.
Now, think of five ways you can provide value to those organizations or people, and start reaching out and offering that value — one contact at a time. If someone is wowed by what you’re giving them for free, it makes them think, “Imagine what he/she will do for me when I pay them."
Take some freakin’ time off. Shut your brain down for a couple days. Thanks to Brexit ripples, flights to Europe are dirt cheap. And the strength of the dollar will make you feel like royalty whether you travel to the Caribbean, South America, Europe, or Asia.
You deserve a break. It will definitely help free up time to work through the suggestions in this article. Plus, who doesn’t need a tan in December?
Whatever you do during the holidays, take time for yourself and for others.
Brent Buchanan is a managing partner at Cygnal, a GOP communication, research & targeted advertising firm.