July is a great time to review your business and personal service providers. Why? If you wait until fall, the holidays, tax preparation, focus on annual goals, and other large distractions will dominate your financial mind. The lull of heavy financial decision-making in July and August makes it a great time for a thorough review. Here are a handful of costs you should review:
- Accountant – You want your accountant to be familiar with your situation long before Thanksgiving. He should be in a position to offer tax-reducing recommendations by mid-November so you have time to make changes before the year ends. Switching accountants in the first months of the year is rarely a good idea, and until May, the best accountants are not likely to want the headache of taking on new clients during tax season. Review your accountant’s performance, reliability, and responsiveness now. Cost is also important, but often cheap does not equal best value.
- Office overhead – This includes a variety of service providers. Evaluate your janitorial services, maintenance vendors, bookkeeper, lawn care, utilities, internet/phone provider, and office supply vendor. Nobody said this would be fun. Chances are if all of your providers have been unchanged for several years, something is due to change. If you don’t use some an outside cleaning, maintenance, or lawn care company; perhaps your time is more valuable than it used to be. Analyze everything, make the appropriate changes, and you will be ready to focus on your business as Q4 approaches.
- Property – Nationally, commercial properties are finally beginning to slide. If your lease is up for renewal, press hard. Any landlord trying to raise rates in this environment deserves an empty building. If your long term strategy includes acquiring property, it is time to start looking around. The decline in commercial values is not finished, but do not try to be greedy by trying to time the bottom of the market. If your lease is locked for several years, you might find the penalty for breaking the lease is lower than the savings of moving on.
- Insurance – You hate shopping for insurance. I hate shopping for insurance. EVERYBODY hates shopping for insurance. Nobody likes washing the dishes after supper either, but it has to be done. Do you need the coverage you have? Do you need more? Are your rates competitive? Is your agent responsive? Avoid online rate sites and distant brokers. Call around, and keep it local. Start with your current agent. Just letting him know you are evaluating will cause him to take a look.
- Debt – Every business should have some amount of leverage. If you do not have any debt, you should really see a financial professional. Presuming you do have debt, where is it? What does it cost? What are the terms? Many businesses were squeezed in the last 24 months by banks calling in their revolving debt lines. Does your bank have the right to demand full payment on your short-term debt? If so, could you replace that credit line elsewhere, quickly? Now is also a great time to evaluate your internal reporting and review process. How often do you produce and review your core business statements? Do the right people see them? Think this through, it could not only save your business unnecessary costs, but a review of your debt and processes could save your business.
A proper review of each of these items takes time. Changing any of these items takes time. July is when you likely have time. Do this now, so you know entering budget season for next year that the cost side of the business is already as efficient as possible.