Another year is almost finished.
When it comes to scrap yard management, assessing how you fared this year will help you prepare for 2017.
Despite a post-election uptick, scrap metal prices largely hampered the recycling industry during 2016. Just the fact that you still open your doors every day means you have fared better than the many scrap yards that have closed during depressed market conditions.
But do you know just well you have fared? And, how you expect to improve in 2017?
Robust reporting and proactive planning are essential in scrap yard management. Determining your successes and failures will help you build on the former while avoiding the latter.
Follow these seven scrapyard management tips to finish 2016 strong and start 2017 even stronger.
1) Catch up on your bookkeeping.
Ensure that you have an up-to-date accounting of your revenue and expenses. Knowing how much you’ve taken in and how much you’ve spent will simplify tax season and better position you to make sound decisions during the rest of 2016, according to end-of-year business planning tips from FreshBooks, a provider of online accounting software.
2) Complete your quarterly tasks.
The year may be ending but so is the quarter. And, because of their nature, you can’t have a full year unless you have four quarters so you must close out the last three months of 2016 as you did the preceding three quarters.
Your quarterly accounting tasks should include reviewing quarterly payroll reports and making any necessary payments, as well as computing and paying estimated income tax, according to a small-business accounting checklistfrom QuickBooks. Your payroll services provider should prepare and file reports but you should verify their accuracy. You also should consult with your accountant on income tax payments, QuickBooks advises.
3) Fulfill your annual accounting responsibilities.
QuickBooks includes four annual accounting tasks in its checklist.
1. Review past-due receivables. Determine whether you can collect receivables that are significantly past due or will send them to a collection agency or write them off as a deduction.
2. Review your inventory. Decide if you will write-down the value of unsold items for a deduction on your year-end taxes.
3. Complete IRS compensation forms. Fill out an IRS Form W-2 for any employee and a Form 1099 for any independent contractor whom you paid a total of $600 or more during the year. You have until Feb. 1 to mail these annual earnings reports to the people who worked for you. You must file with the IRS by Feb. 28.
4. Approve full-year financial reports and tax returns. When it comes time to file your taxes, review your financials and returns for accuracy.
4) Do year-end tax planning.
FreshBooks suggests that you meet with an account before the year ends so that you can follow any advice that they may have for reducing your tax bill. For example, you may be able to purchase some equipment for your yard that would help defray a larger-than-expected profit.
5) Run management reports.
Even if you did well this year, you will want to do better in 2017. But you can’t plan to improve unless you know how you did.
If you haven’t already, run reports like:
- Materials bought;
- Materials sold;
- Transactions by customer;
- Equipment inventory; and
- Customer service time.
Establish benchmarks with these reports so that you can compare your progress in 2017.
6) Plan for 2017.
Scrapyard management doesn’t figure to be any easier next year but you can be more effective. Strategic planning is crucial for capitalizing on opportunities that have arisen or may develop. Start by clarifying the business you are trying to build, according to tips for year-end strategic planning from Inc. magazine. Write out your vision for what your recycling center will look like three to five years from now. Be specific. Quantify sales and describe it qualitatively with criteria like your marketplace differentiators. Then back out your strategic plan based on your goals.
7) Re-energize.
Starting next year strong will require you to be ready. Recharge your batteries by taking time off. Notify employees and customers well in advance though so that they can plan accordingly. When you return, pour your energy into 2017.
The past year has been difficult for many scrapyards. However, you can make the most of 2016 by thoroughly and candidly assessing your performance with a comprehensive year-end business review. Then proactively plan to do better in 2017.