Small business owners who expect to hit the ground running when 2008 arrives might want to think about sitting back for a just a bit and doing some strategic and financial planning for the new year.

Assessing how you did in 2007 and setting goals for the coming year will increase your chances of success, and might even help you lower your stress levels a little.

Accountant Scott Rutter recommends owners go beyond examining revenue and profit figures, instead taking a holistic view of the business and coming up with a long-term strategic plan.

''If you don't have one, you should put one in place,'' said Rutter, a partner in the New York-based firm Citrin Cooperman & Co. LLP. He noted that an owner needs to consider, ''Where am I taking this business in three years, in five years?''

Strategic planning by necessity needs to be honest and realistic, and can require some hard questions such as ''Do they think the business has legs? Can I diversify or not?'' Rutter said. January is also the time to think about relationships: do you need new customers or suppliers?
If you need to prospect for new business, come up with a marketing plan first.

''Target some significant areas where you think you can get the business and focus your energies on that,'' Rutter said.

Meanwhile, ''you really should re-evaluate your relationships with vendors,'' he said. ''Be sure you're getting the right price on the right product.''

You also need to think about staffing: do you have the right number of employees to accomplish what you want to do in the new year?

And, of course, you need to budget for 2008, which involves making decisions across the business.

Leon Dutkiewicz, a certified public accountant with Margolis & Co. in Bala Cynwyd, Pa., noted that a budget is critical if a small business is to be assured of a healthy cash flow throughout the year: ''They need to be setting aside money for taxes and unforeseen circumstances, capital expenditures and contingencies.''

But crucial as this part of running a business is, many owners never get around to it.
''A lot of things are responsive rather than proactive,'' Dutkiewicz said.

Business owners who do put a budget together usually focus on sales and overhead, but accountants say many don't include important items like retirement plans that can have a big impact on the company as a whole. Setting up a retirement plan has great tax benefits, but perhaps more critical is that this employee benefit will help a business attract and retain talented workers.

The same goes for budgeting for employee salaries: what if one of your most critical staffers asks you to match an offer he or she has from a competitor? With a well put together budget, you might be able to hold on to that worker.

''But many business owners don't realize how valuable planning is,'' Dutkiewicz said.

Capital expenditures are also something that should be budgeted for at the beginning of the year. Think now about whether you'll need to upgrade your computer network or replace your PCs later in 2008, even if your technology is working well now.

January is also the time for owners to decide whether they want to change their corporate entities, Dutkiewicz said. For example, a partnership might want to think about converting the business to an S corporation, which means different liability and tax considerations; state and federal laws require that to be done in the first few months of the year.

Rutter recommends that owners keep focused on those broader strategic issues as they do budget planning. ''You can cut expenses all you want, but if you're not growing the business and growing it right, you're not going to be successful,'' he said.

It can be hard to fit planning into an already overpacked schedule. Owners who feel they just have no time should probably think about delegating some of their other tasks. Planning is something that shouldn't be neglected or given short shrift.

It's also something that shouldn't be done alone, and January is a good time to bring an accountant or other financial adviser into the process. Owners should look to financial advisers as a resource for much more than tax preparation. A good accountant will help the planning process by taking that holistic approach to business.

Source: Associated Press