How to Get Started with Year-End Small Business Planning

It’s the most wonderful time of the year to start year-end planning for your business. The question many may be asking is ‘where do I even start?’ We’re sharing our timeline and dos and don’ts because right now is the perfect time to start planning so your business is ready to start the new year off with a bang! You don’t want to be left behind come January 1st.

Key Takeaways

  1. You first need to establish a leader in the organization to facilitate the planning process
  2. Establish a timeline and work backwards
  3. Know the difference between budgeting and forecasting
  4. Follow key dos and don’ts throughout the process

What does the year-end planning process look like and who is involved?

First, establish a leader in the organization to facilitate the planning process. Most likely this will be your CFO.

Next, establish a timeline and work backwards. Here is an example:

  • December 15th Final business plan created and CEO presents goals and desired outcomes to the entire organization
  • October 15th – November 14th First draft of the financial budget and forecast created by the Controller. Plan to have meetings in place with department heads and assign ownership of budgets by department to create accountability within the organization. Additionally, the CFO will present the first draft of the plan to the remaining leadership team members for input and circulate changes afterwards until it is finalized.
  • November 15th – December 14th Leaders in the organization meet to align on goals and strategy for the coming year. Begin these meetings with a focus on the Company’s mission, vision, and core values. We recommend meeting offsite to facilitate collaboration, creativity, and limited distractions. Leaders should also review their long term business plan during these meetings and think through how next year’s plan aligns with long term goals.

What is the difference between budgeting and forecasting?

The budget is something that you set up once a year and report against during the following year. It’s important to set up the budget model so that it is easy to layer in actual numbers for next year’s analyses. The biggest thing to remember is that it’s unchanged once it’s set.

The forecast is dynamic and resets at the end of every quarter for the next four quarters. Your forecast will reflect changes in your business as well as the economic environment since you originally set your budget. The Controller prepares the re-forecast quarterly and the CFO presents to the leadership team.

The Dos and Don’ts of Year-End Planning

DO: Budget Top Down. Start by understanding your sales funnel and determine your base marketing metric. How do you bring in leads? How many leads turn into proposals? What is your close ratio? When you understand these numbers, you can forecast revenue more accurately from the top down. In addition to new sources of revenue, be sure to account for existing customer revenue and use a historical retention ratio along with any planned pricing changes to predict next year’s revenue.

DON’T set an arbitrary sales goal that is unsupported

DON’T set an unrealistic budget – revenue or expenses

DO forecast a cash flow statement and balance sheet that includes

DON’T try to do this without an accounting team

DO plan for uncertainty with scenario-based forecasting. Model low, medium, and high revenue scenarios and identify what variable costs will decrease and what discretionary spending needs to be reduced. This type of preparation can help you feel safe that there is a plan in place for profitability regardless of revenue volatility.

DON’T use last year or last month’s run rate as the only basis of expense forecasting

DO plan for seasonality and irregular expenses

DO take into consideration the current marketplace and adapt for the current economic environment.

DON’T expect your budget to be perfect. Remember that every quarter is an opportunity to re-forecast.

For more information on year-end planning, check out our latest Bonfire Chat: Blink! And It’s No Longer 2022. The Ultimate Webinar on Year-End Planning


The year-end planning process can be challenging, but you don’t have to do it alone. Our team is ready and able to help guide you through the process and make sure you have everything you need to get next year started off on the right foot. Reach out to us today for any assistance you may need or questions you may have throughout the process.

This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.

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