Episode 23: Plan Next Year’s Success with a Year-End Financial Review

  📍 Welcome to CreativeMind Smart Money, the podcast where creativity and business smarts collide. I’m your host, Samantha Eck, bookkeeper, business coach, and your go to guide for building the creative business of your dreams. Whether it’s mastering your money, streamlining your systems, or growing your business, I’m here to share insights that empower you to thrive.

Plus, I’ll be bringing in industry experts to dive into all aspects of entrepreneurship, so you can turn your passion into profit without losing your creative spark. Let’s get started.

  You’re listening to the Creative Minds Smart Money Podcast, and I’m your host, Samantha Eck, here to talk about all things bookkeeping and finance to support your creative business. And today I’m so excited because our topic is how to conduct a year end financial review for your creative business. Now, you might just be thinking, Samantha, last week you just talked about tax season, so why do we actually need to talk about conducting a year end review?

Well, the two of them are completely different things, and I’m going to explain why. Preparing for tax season is all about getting ready to hand your books off to the IRS. Whereas when we’re conducting a year end financial review, we’re really looking at our books overall throughout the year to figure out what we need to do to pivot over the next year.

There’s a lot of things that have happened in the past year depending on how you profited or if you had any losses. So learning from those experiences is going to be so important because it’s going to show you how you can grow as a business over the coming year. I know it’s scary to kind of sit down and look at a lot of this, but it’s going to be so important so that you can notice some trends and hopefully take stock of what worked and what didn’t.

If you’ve ever felt like you’re winging it year after year, this is going to change the game for you. I just want to show you how you can analyze your finances so that you can see if your business is performing and makes those shifts so that you can hit your goals next year.

So the way I like to talk about this is that tax prep is about compliance. This is about growth. A year end financial review is going to help you see the bigger picture, To analyze how your business performed, what’s thriving, what’s not. Spot opportunities for change, whether it’s raising your prices, cutting some expenses, or shifting your offerings.

This review is going to show you where you can improve. It’s going to help you get intentional about next year. Instead of starting next year feeling overwhelmed and aimless, you’ll have a clear strategy for success. This is your moment to pause and think. Reflect and take back control of your business because if you don’t take the time to review your finances, how will you know it’s really working?

A lot of times people tend to avoid goals, especially in the financial sector, because they think, well, having those goals isn’t really going to help me, but it is so important. And I’ve talked about this in a couple of trainings I’ve done, but setting goals for your business is one of the most important things you can do because without having a goal, you have no clear direction.

I’m not just talking about a revenue goal, though. I’m not saying, hey, I want to make 10, 000 a month next year, which is 120, 000 a year. That’s not going to cut it. You need to set goals for everything. You need to understand what percentage of your income you want to be spending on your expenses. You need to understand what percentage of income you actually want to take home at the end of the day.

Do you want to take home 20%? Do you want to take home 50 percent of your revenue? Whatever that is, you need to understand that. You need to understand how much you want to set aside for yourself. How much money do you want to pay yourself? And no, this isn’t about paying yourself last. It’s about coming up with that intentional goal to say, I’m going to pay myself 1, 200 a month next year.

Then you have to do it. It’s showing you where you need to go. It’s not necessarily shaming you if you don’t reach these goals, but it’s showing you what works and what doesn’t. So, what do you need to do? We definitely need to look at our profit and loss statement. It tells you how much money you made versus how much you spent and it’s your business’s performance card for the year.

So instead of just looking at it overall in the entire year, you’re going to want to pull those numbers and look at it on a month by month basis. Analyze, If you made a profit every month or if you didn’t make a profit every month. Now, if you’re working with someone like me, they should have shown you that every month.

At the end of the year, I also show my clients the big picture. We go over their goals that they had for the year and say, Hey, you know, we really didn’t meet this goal during this month. How can we make meet it next month? And if it’s historical, we analyze how we can make that a positive month next month, which is so powerful.

Then you have the cash flow statement, which is obviously something that you should always look at because it shows you how much cash has actually moved in and out of your business. Are you cash rich or are you drowning in bills? Obviously this report is going to tell you. If you’re spending more than you’re making, that’s always a problem and that’s something we need to adjust.

You want to go through your expense categories and find out what’s eating up your money. Are there subscriptions that you forgot about? Are there tools that you don’t need? You want to clean that up and actually get rid of anything that you no longer need. It’s a really good time to analyze everything and say, okay, here are what I’m paying for monthly.

Is this still working for me? Does it benefit me? Is there an ROI? Is it something I really need next year? And if the answer is no, cut it. Now’s a great time to trim the fat so that next year you can have better numbers and hopefully have a bigger profit. More money in your pocket is never a bad thing.

The next thing you want to do is break down where your income came from, which services or products made the most money. Now you, if you’re not tracking this in your bookkeeping software, that’s not necessarily going to be beneficial to you.

However, there are ways you can track this in Stripe, HoneyBook, things like that, based on what you did. A lot of times with my clients, what we’ll do is break them down by services or offerings. And if not, we’ll take a look at what their offerings are just to help analyze that a little more. You really want to analyze which one performed well and which ones didn’t.

That way you can pour your heart and soul into the ones that performed well and ditch the ones that didn’t. That doesn’t mean you have to get rid of them entirely, but at least you know you don’t have to pour everything into them. You want to look at if you have any unpaid invoices hanging around, you want to get those cleared up before the end of the year, and then also figure out why you still have unpaid invoices.

Remember that episode a while back where we talked about getting those invoices paid? Now’s the time to start initiating all of that. Now that you have all those numbers, we really want to dig into what they’re telling you. What made you money?

Look at each revenue stream and ask yourself, was this consistent? Did it align with your time and energy? What didn’t work? If a service or product didn’t sell well, it might be time to pivot or retire it altogether. Figure out why it didn’t sell well or say, you know what? I don’t think I need this anymore.

Go line by line through your expenses and ask yourself, was this necessary? Did this expense help me grow my business or can I cut and reduce this cost next year? Pro tip, if you’re spending money on tools or subscriptions you barely use, again, now’s the time to cancel them. Let’s free up that cash for better investments.

You also want to perform a pricing check. Are your prices where they need to be? Did you undercharge this year? Were you constantly booked out and stressed? That might mean it’s time for a rate increase. Did you lose money because you gave too many discounts? Let’s stop doing that. There are a ton of clients that I have that bring in a lot of money, but some of their discounts can be up to 10 to 15 percent and that’s such a crazy number and it’s not something that you really want to be doing all the time.

Look back at the goals that you set at the start of the year. Did you set goals? Did you hit them? If not, why? Were they realistic? Were they able to be achieved? Did something unexpected come up? Again, this part isn’t about judging yourself. It’s about learning. We want to use this review to understand what worked and what didn’t, so that we can adjust our approach to the coming year.

You want to be able to adjust and pivot. You want to use the data to adjust and pivot. You always hear me talking about how you can read the story your numbers are trying to tell you. This is exactly how you do that. You look at all of these tiny pieces, and you start to read a story.

Now that you’ve looked at last year, it’s time to make a game plan for next year. This is where you take everything you’ve learned and turn it into action steps. Set clear, actionable goals. Make sure they’re specific and measurable. I know we’ve talked about this before on this podcast, SMART Goals are the way to go.

Instead of saying I want to make more money, try saying I want to make 10, 000 a month. Instead of saying I want to grow my business, try saying I want to book five new clients per month. Use your expense review to create a budget that aligns with your goals. This doesn’t mean that your budget has to be super strict.

It’s more about looking throughout the year and saying, okay, I set a budget for 300 in software, but this month I spent 500. Why did I spend 500? And figuring that out.

Then it’s time to plan for growth. What’s your next big move? Maybe you’re ready to launch a new service, invest in marketing, outsource some of the tasks that are draining your time. Maybe you’re ready to go to some conferences this year. Maybe you want to do more networking. Whatever it is, make sure it aligns with your goals and your numbers.

Now, a few mistakes I see when people do a year end review is avoiding it altogether. Avoiding your finances doesn’t make the problems go away. It’s your chance to take control, so don’t skip it. You don’t need to spend weeks analyzing your numbers. Keep it simple. What worked? What didn’t? What’s next? A review is pointless if you don’t use the insights to make changes.

So don’t just think about raising your rates. Do it. Don’t notice that you’re just overspending. Fix it. This is the most important part. If you’re feeling overwhelmed and like you can’t really understand what’s going on in your business, it’s a good time, like I said, to hire a bookkeeper and get someone who’s going to help you reach those goals.

The way I help my clients is that we talk about these goals on a monthly basis. We analyze what worked, what didn’t. If they made, you know, 5, 000 more than their goal this month than last month, we look at that and we say, why? Why did we make 5, 000 more? What did we do differently than last month? Do we just have more eyes on our products?

Do we just have more going on? We really want to look at that and understand it.

📍 All right, Fred. That’s your step by step guide to a year end financial review. Remember, with a review, it’s not just about numbers. It’s about stepping into the new year with clarity, confidence, and a plan. Imagine how good it’s going to feel to know exactly where your business stands and what steps you need to take to grow.

You’re not guessing, you’re not winging it. You just have a clear path forward and a goal in mind. And of course, if you’re feeling stuck or overwhelmed, I’m here to help. Whether it’s cleaning up your books or helping you to create that financial strategy, we can get your business where you want it to be.

Thanks for hanging with me today. Now go grab those numbers and take charge of your business. Until next time, farewell, fellow travelers.