Run it with less chaos · Every business
A One-Hour Year-End Review for Small Business Owners
A year-end review does not need a retreat or a consultant; one hour in December, split between the numbers, the customers and the paperwork the new year will ask for, gives an owner most of what a larger planning process would.
General information, not legal/tax/financial advice; talk to a licensed professional about your situation.
At a glance
- A year-end review is a short, structured look back at the year's money, customers and obligations, done before January so its findings can shape the next year's prices, schedule and savings.
- Fewer than half of small employer firms, about 46%, reported operating at a profit in the Federal Reserve's 2024 survey, and 51% named uneven cash flow as a financial challenge.
- In a JPMorgan Chase Institute study of 597,000 small businesses, the median firm held only 27 days of cash outflows in reserve, and a quarter held fewer than 13.
- The hour divides into three parts of twenty minutes: five numbers, customers and prices, and the paperwork and deadlines of the new year.
- Without a review, many owners learn how the year went in April, from a tax return, when it is too late to change anything.
Part 1 | Twenty minutes on five numbers
Most owners finish the year with a feeling about it rather than a figure: It was busy, so it must have been good. A full calendar says little about profit, and the Federal Reserve's 2024 Small Business Credit Survey of 7,653 employer firms found that only about 46% operated at a profit, while 75% named rising costs of goods, services or wages as a financial challenge, so a busy year can still end with a thin or negative margin.
Five numbers answer whether the year was good, and each can be pulled from a bank statement, a bookkeeping app or a booking system in a few minutes. The first is revenue and its change from last year; the second is profit as a share of revenue, after paying the owner a fair wage; the third is cash buffer days, the number of days the business could keep paying its bills from the cash in the bank; the fourth is the share of revenue from returning customers; and the fifth is average revenue per visit or job.
Cash buffer days deserves special attention, because it decides whether a bad month becomes a crisis. The JPMorgan Chase Institute measured it across 597,000 small businesses with Chase business accounts and found wide differences by industry, with labor-intensive service businesses holding the thinnest cushions.
Part 2 | Twenty minutes on customers and prices
The second twenty minutes look at who paid for the year. Pull the customer list from the booking or invoicing system and sort it by revenue, which shows how much of the year rested on a small group of regulars and whether that group grew or shrank. Note how many first-time customers came back for a second visit, how many regulars have not booked in the last three months and which services brought in the most margin rather than the most revenue.
Prices belong in the same twenty minutes. With 75% of small employer firms reporting rising costs as a challenge, a business that kept prices flat this year has absorbed those costs out of its own margin, and December is the natural time to decide whether to change them, since a decision made now can be announced in January with a month of notice. The related pricing guide shows how to calculate how many customers a business could lose after an increase and still earn the same.
| Minutes | Focus | What to pull | What to decide |
|---|---|---|---|
| 0 to 20 | Five numbers | Bank statements, bookkeeping reports | Whether the year was good and which number to improve |
| 20 to 40 | Customers and prices | Booking or invoicing system, price list | Which regulars to call, whether and when to raise prices |
| 40 to 60 | Paperwork and deadlines | Records, retirement plan options, tax set-aside | What to send the preparer, when, and what to set up before deadlines |
Part 3 | Twenty minutes on the paperwork the new year will ask for
The last twenty minutes protect the owner from surprises in the spring. Gather the year's records in one place, using the IRS's list in Publication 583 as a guide (deposit records and invoices for income; statements, receipts and invoices for expenses; purchase records for equipment), and set a date to hand them to the preparer. The IRS generally asks owners to keep records for three years after filing, longer in some situations, and at least four years for employment tax records.
Retirement savings is an easy decision to miss in December, and the IRS deadlines differ by plan. A SEP IRA can be set up for a year as late as the due date of the business's tax return, including extensions; a sole proprietor with no employees can adopt a solo 401(k) after year-end, as long as it is adopted by the tax filing deadline without extensions; and a SIMPLE IRA generally has to be set up by October 1 of the year it covers, so a December review is the time to plan it for next year. The related quick answer compares the three plans and their 2026 limits.
| Revenue this year (Assumption) | $240,000 |
|---|---|
| Revenue last year (Assumption) | $220,000 |
| Revenue growth (Calculated) | 9.1% |
| Total cash paid out this year, including owner pay (Assumption) | $192,000 |
| Profit after owner pay (Calculated) | $48,000 (20% of revenue) |
| Cash in the bank at year-end (Assumption) | $18,000 |
| Cash buffer days (Calculated ($18,000 ÷ ($192,000 ÷ 365))) | 34 days |
| Revenue from returning customers (Assumption) | 62% |
| Visits (Assumption) | 2,400 |
| Average revenue per visit (Calculated ($240,000 ÷ 2,400)) | $100 |
Illustrative example; replace every assumption with your own numbers.
How you compare
- Profit: about 46% of small employer firms reported operating at a profit in 2024, according to the Federal Reserve's survey, so a business with a positive margin after paying its owner is ahead of many of its peers.
- Cash cushion: a business with more than 27 cash buffer days holds more than the median small business in the JPMorgan Chase Institute study, and one with fewer than 13 is in the thinnest quarter.
- Your own baseline: write this year's five numbers on one page and keep it; next December's review starts by comparing against it.
Questions to ask this week
Was this a good year, by the numbers? Answer with revenue growth, profit and cash buffer days, not with how busy it felt.
Which regulars have not booked in three months? Make a short list and call or text each one in January.
Will prices change in the new year? Decide the date and the amount before the end of December.
Which retirement plan deadline applies to us? Check it now, before the window closes.
When will the books go to the preparer? Put the date on the calendar.
Block one hour before the end of December, open your bank statements and booking system, and fill in the five numbers first.
About this research: This article draws on the Federal Reserve Banks' 2024 Small Business Credit Survey, a JPMorgan Chase Institute study of cash balances at 597,000 small businesses and IRS guidance on recordkeeping and retirement plans (Publications 583 and 560). The cash buffer data is from 2015, and buffers may have shifted since; the worked example is illustrative.
Sources
- Federal Reserve Banks. 2025 Report on Employer Firms: Findings from the 2024 Small Business Credit Survey. 2025. 7,653 employer firms.
- JPMorgan Chase Institute. Cash Is King: Flows, Balances, and Buffer Days. 2016. 597,000 small businesses.
- Internal Revenue Service. Publication 583, Starting a Business and Keeping Records. Revised December 2024.
- Internal Revenue Service. How Long Should I Keep Records?
- Internal Revenue Service. Publication 560, Retirement Plans for Small Business. For 2025 returns.
- Internal Revenue Service. SIMPLE IRA Plan.
Related reading: The Five Numbers That Tell You Whether This Was a Good Year · What Messy Books Cost at Tax Time · Retirement Plans for Small Business Owners: SEP IRA, SIMPLE IRA or Solo 401(k) · How to Raise Prices Without Losing Customers, Based on the Research
Work with osNOVA on your year-end review
We help owner-run service businesses pull their five numbers, see which customers carried the year, set prices for the new one and build the habits that keep cash steady, starting from what the owner wants next year to look like, whether that is fuller weeks, more regulars or a bigger cushion in the bank.
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