A business plan is an essential document for planning ahead.  It often projects 3-5 years ahead and outlines the route your company plans to take to increase revenues.  For most small business owners, it is a year-end task that involves both preparing for the New Year and evaluating the year that just passed.  Taking stock, preparing, and planning are the vital to help you realign goals and resources so you can measure where you are and take advantage of new opportunities.  This task can be confusing and daunting.  Here is a simplified year-end small business checklist of what you need to gather and review and how to organize the information into a valid business plan for 2022.

Key Financial Documents

As 2021 is coming to an end, this is the time to gather and review your key financial documents.  This will show if you are running a healthy business or if you need to tighten finances.  It will show where adjustments are needed, such as more sales or less expenses, along with how much you need to adjust.  Thirdly, if you are looking for funding, expanding, or mentorship, specific financial documents will be needed to show to interested parties to evaluate your business.  The three key documents needed are: the balance sheet report which shows all the assets, liabilities, and equity; the income statement report which shows revenue, expenses, and profit; and lastly, the cash flow statement report showing opening and closing cash in a specific period of time, with inflow and outflow itemized information.  You can often access these documents through your accounting software, from your accounting team, or from your private CPA.

Preparing Year-End Documents

Once you have gathered these documents, you then need to review them and prepare “year-end” copies of these documents.  Ideally, as a business owner, you should do this at least quarterly to know where your business stands during the year.

A year-end balance sheet will let you know if your company is solvent or in the red.  It compares what your business “owns” to what it “owes.”  The owned items  includes things like physical inventory, property or equipment, trademarks, and business invoices that still need to be collected.  The owed items includes things like pension plan obligations or invoices that need to be paid.  By doing this comparison, you can see whether you should be cutting back on spending, or growing your business.  As always, the balance sheet MUST balance.

Next, you need to prepare a “year-end” income statement which will let you know if are earning more than you are spending, or the opposite.  This document is often called a profit and loss statement.  You are comparing the amount earned in a specific period with the amount spent in that same period.  Choose a period of time, either 2021 as a whole or perhaps just the last three months.  Write down all your revenues and gains during that period on the top half of the page.  On the bottom half, document all your expenses and losses.  Subtract the latter from the former, and you’ll be able to see your net income during that time period.  Note that this document does not include any external equity you as the business owner have, such as stock.

Now you need to prepare a “year-end” cash-flow statement to confirm how much cash you had at the beginning of a specific period and how much at the end, and where it all went.  It should include cash earned and lost from doing regular business (revenue and expenses), cash flow from investments like assets bought and sold and stock, and cash flow from financial decisions like loans and their repayment.  Once this is itemized, you will be able to see how much cash you have at the end of this period.  When you compare it to the cash you had at the beginning of the period, you will see if you gained or lost money.

Putting These Documents Together to Create Statistics

From the “year-end” documents you prepared, you will be able to calculate some important statistics.  Current assets divided by current liabilities is your Current Ratio.  You hope the current ratio will be between 1.5 and 2.  If you have a current ratio of 1 it means you may not have enough money to last the year, and if it is more than 2, it means you not investing enough money into your business or outside investments.

Next, you can figure out your Debt Ratio by dividing your total debt by your total assets.  A positive debt ratio can vary from industry to industry, but anything below 0.3 is considered fair.  If you find yours is above 0.6 it may be difficult to get any additional loans.

Your Gross Profit Margin is the last statistic.  First, divide your profit (what you have left over after paying your costs) by your total revenue (the total money you brought in.)  This figure will show what percentage of your income is actually profit.

Get Tax Documents Together

Even though it is not tax season yet, this is a good time to gather your tax documents.  If you do your own taxes, these financial reports you just prepared will be helpful in filling out your small business return.  Of course, you many need to prepare other tax forms including Form 1099-NEC and Form 1096, W-2 Forms and W-3 Forms, and State and Federal payroll returns annually (Form 940) or quarterly (Form 941.)  You can also compile your income, both personal and business if applicable, and gather all your deductions.

Assess Your Goals

Now that you have all this information at your fingertips, it is time to assess if you met your goals for 2021.  If you prepared a specific list of goals for 2021, pull it out and review it.  Here are some important questions to ask:

Did you achieve your goals-why or why not?  Did you exceed your goals-why and how?  What should be your next steps (ex: pay off some debt, expand, etc.)?

If your fell short of your goals-why and how?  If so, what next steps should you take to improve things (ex: cut down on production, lower prices, etc.)?

 Create Your Goals and Business Plan for 2022

Now that you are clear on the financial picture for 2021, your planning will be less time-consuming and easier for 2022.  Now is the time to write them down.   For example, do you need to increase sales, expand your office, hire more employees, institute more training, reduce costs and if so, which ones?  You should look at 2021 goals but also see if circumstances have changed, such as COVID-19, interest rate changes, and other issues.  This will help you adjust and decide on new goals needed.  It is also important to research trends and changes in your industry.  From there, prepare your key goals for 2022, keeping in mind the next few years.

Next, devise an action plan for each goal.  It is wise to break them down into small pieces and pinpoint key metrics to measure and assess them on an ongoing basis.  Decide if your employees can achieve these goals and how many months or quarters it will take to achieve them.  Early 2022 is also a great time to plan your marketing campaigns for the year.  Is there any specific product or area of marketing you need to focus on?  Do you need a stronger social media presence?  Do you need to hire more staff for marketing?  See if you can gather data on what your customers responded to last year.  Do you want to pursue a new demographic this year?

This is also a good time to plan specific time throughout the year to prepare and review your financial documents so that you are not scrambling at the end of the year.  Perhaps quarterly reviews are needed.  Also, set up appointments with accountants or other advisors for 2022.

The end of the year is also a good time to review your employee compensation and benefit structures, making sure they are in line with your industry, regions, and business values.  If your compensation and benefits are not competitive, your top people could leave to go elsewhere resulting in positions to fill.  Also look at any promotional paths you have set up to reap the benefits of employee loyalty and longevity.

For additional information and assistance, contact the US Small Business Association in Washington, D.C. through for ways to plan, launch, balance, and grow your small business.

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Many are working full time, running a household, caring for their children and trying to fit in some leisure time. These women are from all different backgrounds, cultures and ethnicities. They work in different industries and professionals from entrepreneurs, doctors, lawyers, contractors, educators, employees and employers.

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Latest from blog


Many are working full time, running a household, caring for their children and trying to fit in some leisure time. These women are from all different backgrounds, cultures and ethnicities. They work in different industries and professionals from entrepreneurs, doctors, lawyers, contractors, educators, employees and employers.

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