The age–old saying, or a variant of it – “You don’t know where you’re going until you know where you’ve been.” – couldn’t be more appropriate when it comes to closing out the year for a retail business. Getting a snapshot of where your business is at, reviewing the past year, preparing earnings and tax information, and planning for the future all require a thorough examination and a year-end checklist is an essential part of that review. 

Why is it Important? 

The end of the calendar year is always a busy time for retail businesses. Even this year, when brick-and-mortar stores are generally expecting less foot traffic than normal because of the coronavirus restrictions, stores are still expecting more than their normal daily dose of shoppers. So, the last thing retail businesses want to do is year-end inventory. That’s why having monthly, and even weekly, inventory counts and reports are crucial. 

“At the year–end, you don’t want to repeat the same chaos as years past, where you hire all your workers, friends and family to come in and count your store. That’s why it’s important to proactively keep up with inventory management, so you can avoid the year-end count,” says Charles Owen, chief experience officer at Paladin Data Corporation, a leading provider of retail management solutions. “By investing only a few minutes of time every day, you can avoid the year-end physical inventory mayhem.  By doing this, stores can focus on sales and marketing and do away with the added distractions and expense of end of year inventory counting.” 

Owen says keeping accurate inventory records not only helps with year-end record keeping, it lets stores optimize their inventory by eliminating products that don’t sell, properly locating items in the store, and detecting missing inventory. Stores that utilize comprehensive digital retail platforms can automate many of these processes which makes year-end tallying and reporting a breeze. 

Year-end Checklist 

There are several informational items that every year-end checklist should contain. 

√ Physical Inventory 

Physical year-end inventory reports not only provide you with information required for tax reporting, they also let you evaluate how your inventory investment is performing. 

“Reviewing, not just counting, your inventory is extremely important. When reviewing your inventory, you want to make sure everything is priced accurately, the right items are on the right peg, and the items are well lit and presentable. It helps you find shrinkage, too,” he explains. “If you do this habitually, at the end of the year all you have to do is push a button to get the information you need.” 

√ Annual Financial Reports  

Running year-end reports gives businesses both a snapshot of where they are at the end of each calendar year and a big picture of their progress over the past 365 days. These year-end checklist reports should include: 

• Profit & Loss Statement 
• Balance Sheet 
• Cash Flow Report 

These reports are required for accounting purposes, although businesses should consult their CPA about specifics. A year-end snapshot also shows a business if it met its annual goals, which allows management to adjust goals for the coming year. 

Owen suggests businesses prepare inventory valuation summary reports, accounting summary reports, and period comparative revenue reports. He says calculating gross margin return on investment (GMROI) is key to a business getting the most out of its inventory investment. GMROI analyzes how efficiently a store can convert inventory into cash. 

√ Employee Information and Payroll 

The end of the year is also a good time to update all the information you have on your employees. Things as simple as correct addresses, phone numbers and email addresses should be regularly reviewed and be part of your year-end checklist. Payroll information such as salaries and tax deductions help businesses keep track of current employees, properly initiate new hires, and audit and remove former employees. 

Employee records also let businesses review past staffing, plan future needs, and keep a handle on their access to business networks or company information. 

√ Marketing and Sales 

Part of the yearly planning process should include marketing and sales. It’s a good time to look at advertising campaigns and channels – website, email, social media, print, or broadcast. With good metrics, you can eliminate what doesn’t work and adjust your budget accordingly. 

Reviewing marketing and sales processes is simplified through a retail management platform utilizing specialized software products such as Pointy, Ez-Ad, and various rewards and customer incentive programs. 

An annual review of your company’s website is also a good idea. Even if you don’t think it needs refreshing, auditing contact names, phone numbers, email addresses, and content is always a good idea. 

√ Computer Audit and Update 

Technology and a strong computer network are integral pieces of every successful business and should be included on your year-end checklist. The pandemic and closure of brick-and-mortar stores demonstrated how important having integrated online and in-store marketing and sales. Those stores that could sell via their websites kept their point of sale systems ringing. Many of those without an online presence closed for good. 

Businesses should have equipment replacement plans worked into their overall budget. Just like delivery vans and forklifts, computer terminals, servers, payment terminals, and mobile devices should be annually reviewed and updated. 

“The biggest mistake many businesses make when investing in retail technology is stopping once the system is in and operating,” Owen says. “Why do stores invest in a retail platform? The answer is pretty simple: to simplify operations, increase efficiencies, and make more money. Buying retail technology will help you do all of that, but only if you learn how to properly use it and continue to invest in it. You get out what you put in.” 

If you haven’t already instituted a program of regularly backing up your files daily, month-end and year-end backup gives you a snapshot of where you finish each year. Many technology providers offer managed services that regularly update programs and back up computers or entire networks. 

√ Update Your Vendors 

It’s always good business to know who you’re buying from and have a relationship with their representatives. Whether you’re a member of a co-op and have a single vendor or buy from dozens of suppliers, keep those contact files up to date. 

It’s also a good idea to update information like your electrical, HVAC and plumbing contractors, as well as contacts at your local city, county, or parish. City council, county representatives, and state legislators are other lists that are often in need of revision. Those relationships can change any time there’s an election.  

√ Review and Plan 

The pandemic and its subsequent economic shutdown, along with the social and civil unrest that has gripped so many cities and towns, have made 2020 both hard to survive and difficult to use as a benchmark. How will society and the economy recover? What will that recovery look like? Will the retail industry ever return to what we remember or are we in for that over-used catchphrase a “new normal?” 

Regardless of what happens, businesses need a record of what happened this year – what worked, what didn’t and what steps were required to fix what broke. Those records let businesses plan and work toward success and should be part of your year-end checklist. 

Business 101 tells us that SMART goals need to be set to help stores strive for success. 

• Specific – Professional golfer Jordan Speith and his caddy, Michael Greller, used the mantra of “small targets, small misses” when Speith was playing his best and winning major tournaments. From the fairways and even the rough, Speith would aim at a very small target – a spectator or a tree behind the green or a logo on a television tower – to his narrow focus. It allowed him to usually hit a great shot. Businesses can learn from that kind of focus by setting clear, specific goals. 
• Measurable – Goals should be quantifiable. Earnings goals should be in dollar figures or percentages which allows businesses to measure progress and success. 
• Attainable – Setting unrealistic goals doesn’t do anybody any good and can’t be celebrated.  
• Relevant – Relevant goals focus on what’s important to business success and, therefore, personal success.
• Time-Based – There should be a deadline to achieve goals – year-end, quarterly, monthly, weekly. 

The year’s end is always the best time to review and plan for the upcoming year.