As we look to close the books on 2020, there is still work to be done to get ready for 2021--even if snow removal is not on your service list. Here are two things you can do to help ensure a great start in 2021:

Construct an operating budget for 2021
For many companies, this is on the ‘to do’ list but gets pushed back and postponed until the question becomes “why bother?” Make this the year that doesn’t happen!

Having an operating budget for your business is like having Google Maps in your car. Both tools provide a roadmap to help you get where you want to go. Operating budgets are an indispensable business resource and are critical in helping leaders set goals for the company and for their employees. They are a measuring stick that helps determine how reality is comparing to pre-season predictions. And they are critical in helping to determine what changes can be made to help cope with unforeseen and unplanned circumstances, such as the COVID-19 pandemic of 2020, droughts, or recessions.

Many accounting programs will create a budget based on actual data from previous years that is already in the accounting system. This provides a good starting point so you can then collaborate with your team about their own expectations for sales, expenses, personnel needs, etc. Taking that input and updating the information provided by your accounting system will give you a first pass at next year’s budget. Work with your team to refine this document until you have your ‘realistic’ budget for the next year. Now, do this exercise twice more – once considering the most optimistic ‘stretch’ goals you and your team think could happen if everything – retention, sales, expenses – goes exactly right. And finally, one that reflects the worst possible scenario – high client turnover, production problems, unforeseen economic or other circumstances which result in significantly less revenue. Use this exercise to discuss and plan for changes that would need to be made if the worst case happened so that you are prepared for it even if it (hopefully) does not come to pass.

Finally, remember that your budget is a living document. Once complete, don’t just shove it in a drawer or put it in a binder. Consistently monitor your actual progress against it and make changes to the budget as you go, so that you are adjusting it to meet the reality of the current year. You may also want to construct a Capital Budget to address those capital expenses – equipment, improvements to property and building, etc. – that you are planning to make and what you can reasonably do based on each of the three scenarios you worked out in your operating budget.

Verify assets listings are current as of 12/31
Business personal property tax returns are done annually in Colorado and are typically due on April 15 for each county in which the company has assets. Returns list the machinery and equipment used in the business as of January 1, including assets that have been fully depreciated but are still in use, and assets that are not being actively used but which are subject to IRS depreciation rules on your books. Best practice is to update your financials monthly with assets that are purchased, scrapped, sold or lost through theft. This ensures that your balance sheet reflects the proper amount of depreciable assets, monthly depreciation charges are accurate, and the chore of completing the required personal property tax returns is easier and less time-consuming. Check with your tax professional to make sure that you are properly reporting machinery and equipment for business personal property tax purposes.

Steve Steele, MBA, is president at Steele Dynamic Services, LLC a green industry consulting firm based in Arvada, which focuses on internal business operations. He has over 20 years’ senior and executive-level management experience in a variety of industries and has served the landscape industry through ALCC on the board of directors and legislative committees. Learn more at SteeleDynamicServices.com.

Read more in this issue of Colorado Green NOW:
2020 SLM Colorado wrap-up
ALCC announces 2021 board of directors
Scam alert: is a fraudster taking your company's payments?
ProGreen EXPO becomes the ProGreen EXPERIENCE