What to Do About Year-End: Smart Moves for Bonuses, Spending, and Planning Ahead

With year-end in the rearview and fresh on our minds, many business owners found themselves asking the same questions: Should I give bonuses? Should I make big purchases before December 31? How do I plan for next year?

In a recent episode of Profitability Playbook: The Simple Numbers Podcast, hosts Brandon Gray and Mike Maxson tackled these common year-end dilemmas head-on. Here are the key takeaways to help you finish strong and set the stage for a profitable new year.

Rethink Bonuses: Motivation vs. Expectation

Bonuses are a hot topic every December, but they’re often misunderstood. Brandon and Mike outline two main approaches:

• Charitable Bonuses: A way to share success with your team after a strong year. If you choose this route, communicate clearly that it’s a one-time gesture, not a guaranteed annual event.

• Performance-Based Bonuses: These should be tied to measurable triggers, such as gross margin dollars, contribution margin, or profitability, rather than revenue. Why? Because revenue can be misleading if margins are thin.

Pro Tip: Model the financial impact before you commit. Ask yourself, “If we hit the target, what does profit look like after bonuses?” Without this step, you risk eroding profit.

Year-End Spending: Don’t Buy Just to Save on Taxes

It’s tempting to rush out and spend money in late December to reduce taxable income. But Brandon warns against “panic spending.” Instead, pay down accounts payable if you’re on a cash basis and make planned purchases early enough to put assets into service before year-end. If you know you’ll have to make large purchases in January, go ahead and make them before December 31.

Planning Ahead: Flexibility Is Key

Looking ahead, the economic outlook remains uncertain. Inflation is still hovering around 6%, insurance and travel costs are climbing, and wage increases are modest at 3–5%.

Here’s how to prepare:

• Build multiple versions of your plan: minimum, target, and stretch scenarios

• Include triggers for action so you know when to pivot

• Forecast cash flow, not just P&L. Profitability doesn’t guarantee liquidity

Don’t spend time creating a plan and then never revisit it. Review regularly and adjust as necessary.

The Big Picture

Year-end isn’t just about closing the books. It sets the tone for the year ahead. Whether you’re deciding on bonuses, evaluating purchases, or building next year’s plan, the key is discipline and foresight.

Interested in learning more about how you can drive sustainable profit? Contact us to get started.