An 8-step year-end planning checklist for small business stability and growth.

As a small business owner, your day-to-day responsibilities can make it easy to procrastinate on year-end planning. The next thing you know, it’s December and any free time you had for planning is gone.

Starting your year-end planning process early can help you maximize the benefits, according to Hank Koehly, small business banking sales manager for Commerce Bank. “It’s good to sit down with both your CPA and your banker to say, ‘These are the goals we set early in the year. Where are we now, in accomplishing those goals? What can we change?’” Answering those questions can help you make strategic long-term decisions that set your business up for a strong year-end and give an edge in the new year.

Though year-end planning may seem daunting, you don’t have to do it alone. Koehly and Debi Enders, also a small business banking sales manager with Commerce Bank, developed this 8-step checklist of best practices to help guide your year-end planning process. This team has a combined 35 years of experience with the bank.

1. Review financials and plan ahead.

Small business owners are often so busy with core operations that they don't have a clear picture of their financials. Koehly and Enders recommend a quarterly or semiannual financial review. Here's how that financial assessment can help you:

• Evaluate the current and future cash flow
• Look for opportunities to reduce accounts receivable
• Review expenses to decrease costs

“It’s important to know where you are from a cash flow standpoint, year to date, and what you have on the horizon,” Koehly said. “It’s a work-in-progress report. Then, what does that look like for the rest of 2025?”

With current revenue and expenses in hand, you can develop a detailed revenue forecast and expense budget for the upcoming year. If this includes borrowing money, you should meet with your CPA and banker ASAP to ensure your company’s financials will support a loan.

“We often see businesses that don’t understand you are not positioned for borrowing if you’ve been writing everything off,” Enders said. “If you don’t show any income on your tax returns, we have no repayment source.”

2. Apply tax-planning strategies and understand applicable laws.

Businesses intending to borrow money need to show a healthy balance sheet and profitability. As you review business expenses, work with your CPA to maximize your available tax deductions and identify any potential business tax credits. Koehly and Enders also encourage owners to work with their CPAs to stay informed about new tax laws and regulations that could impact their businesses.

3. Identify operational improvements.

With advance planning, there are several steps businesses can take to realize operational efficiencies:

• Conduct inventory counts and reconcile any discrepancies for accurate inventory management.
• Review vendor and supplier contracts to ensure you’re getting the most favorable terms possible for the coming year. These could include extending invoice timelines to 30 days or more, or negotiating discounts based on early payments.
• Budget and prioritize capital, equipment and/or software investments.

With equipment investments specifically, it is much easier for owners to make good decisions about when to invest with a financial forecast and tax plan in hand. Timing and prioritization are key, according to Koehly. “Weigh those options and ask, ‘Am I going to be able to generate the revenue where it makes sense?’” he said. “Are you spending money on equipment this year that maybe you shouldn’t because you want to buy a building next year, or is there a $200,000 piece of equipment you desperately need in 2026?”

4. Access human resources.

The end of the year is traditionally the time to conduct employee performance evaluations, offer raises, assess benefits packages and award bonuses.

Small businesses should ensure all their human resource records are accurate and that their practices comply with all laws and regulations. This preparation will pay off during these year-end activities.

5. Conduct a legal review.

Risk management is an important part of any year-end business plan. Small businesses should speak with an attorney to help them review insurance policies and risk-management strategies to protect their business and ensure compliance with all relevant regulations and laws. Having a trusted attorney and accountant as part of your team of business advisors is crucial, according to Koehly and Enders.

6. Reduce tech risk.

Cybersecurity is a critical but often overlooked area for small businesses. Explore the services or products your banks and merchant service providers offer to mitigate fraud, secure data and protect customers. Year-end planning is also a good time to review the data backup and recovery procedures for your business.

“Most small business owners accept credit card payments,” Enders said. “There’s a lot of liability out there if data is exposed on your watch. While it’s not possible to be 100% secure, talking with your bank and merchant services provider on strategies to mitigate fraud is an important step in protecting customers.”

7. Prioritize strategic planning.

Daily business operations can leave little time for looking at the big picture. Still, it’s essential to evaluate and refine your progress against your goals. Regular strategic planning could include these tasks:

• Conducting a SWOT analysis
• Setting measurable objectives
• Creating marketing campaigns
• Developing succession plans

“Sometimes small business owners are so busy selling that before they know it, it’s over halfway through the year,” Koehly said. “If they don’t have those clear and measurable goals, sometimes they wonder, ‘How am I doing this year?’ Having a strategic plan and reviewing it biannually gives them an opportunity to assess and make adjustments.”

8. Ensure a healthy customer base.

The year-end planning process is an optimal time to check in with your customers.

• Develop a way to gather input and feedback from customers on your products and services so you can address areas of improvement. These insights can also help you celebrate and capitalize on things your company is doing well.
• Evaluate your current client base to identify at-risk clients; seek growth opportunities; and ensure your client base is diversified. “One thing we always look at is making sure all your eggs are not in one basket,” Koehly said. “Right now, it is more important than ever to try to increase your customer base, even if it’s smaller wins. If something were to happen to one customer or industry, then you still have a larger base to pull from.”

We’re here to help.

No matter the challenges your small business faces — and the questions that come with them — you don’t have to face them alone. At Commerce Bank, we’ve been helping businesses of all sizes find the solutions they need since 1865. Because nothing matters more to us than your success.

Please reach out to one of our small business specialists for help with year-end planning or any of your banking needs.

Learn more at commercebank.com/business.