Quick Tips: Bailing Out a Bad Year

From smSmallBiz

FOR MANY SMALL-BUSINESS owners, this will be a tough year.

A weak housing market

and tight credit standards have made access to capital difficult. The high cost of raw materials, from steel to tomatoes, cuts into profits. Gas prices hovering at $4 a gallon continue to stifle consumer spending.

"You can read any number of reports saying consumers are still buying, but from the people I talk to they're not," says Paul Kutz an accountant and financial planner in Great Neck, N.Y., who advises entrepreneurs. "People are spending less money."

Kutz points to a longtime client, an industrial-metals processor in New Jersey, as an example of how the slowdown is taking its toll. After logging several banner years, the firm's last six months have been sluggish. Higher "input costs" — that is, the cost of materials used to create end-products — is eroding profits, which in turn hampers the firm's ability to reinvest in its business and pay out year-end bonuses.

"Without exception," Kutz says, "business owners are having a tougher time this year."

Small firms can bail out a bad year by making the most of year-end tax and financial planning. Taking time to reflect on business goals and revamping strategies for next year should also be a priority, especially if you think economic woes will worsen.

Here are some year-end planning strategies to consider when the going gets rough: