The decisions businesses should test before the end of 2026

The final quarter should involve more than confirming what a business has earned, spent or owes. There is still time before the end of 2026 to review decisions that could affect performance in 2027, including pricing, recruitment, investment, cash requirements, succession and the type of work the business chooses to pursue.

A useful year-end review should look beyond the annual accounts and focus on the commercial questions behind the numbers. The aim is to understand what is working, where pressure is building and which decisions should be made before another year begins.

1. Is growth improving profit?

Higher revenue does not automatically result in higher profit, particularly where additional sales require more people, higher operating costs or greater investment to deliver them.

A business may increase turnover from £2 million to £2.2 million, for example, but if the additional £200,000 of revenue requires £140,000 of extra payroll, subcontractor costs and overheads, the benefit is very different from the headline growth figure.

Turnover should therefore be reviewed alongside measures such as:

• Gross margin
• Staff costs
• Direct costs
• Overheads
• Profitability by department, service or project
• Debtor days
• Cash generation

Looking at profit across the whole business can also hide significant differences between different areas. One department may be growing quickly while contributing less profit than expected, while a smaller part of the business may be generating a much stronger return.

The figures should show not only whether the business is growing, but which parts of that growth are making a meaningful contribution.

2. Can the business fund its plans?

Profit and cash need to be considered separately because a profitable business can still face pressure if several commitments fall at the same time.

A company might be planning two new hires, investing in technology and increasing its marketing spend while also carrying slow-paying customers and preparing for corporation tax, VAT or other payments. Each decision may look manageable individually, but together they can create a much larger cash requirement.

A rolling cash-flow forecast can help management see when those pressures are likely to arise. It should include realistic assumptions for:

• Customer receipts
• Payroll and employer costs
• Tax payments
• Loan repayments
• Capital expenditure
• Director or owner drawings
• Recruitment
• Planned investment

It is also useful to test what happens if assumptions change. If a large customer pays 30 days later than expected, a project overruns or sales fall below forecast, management should understand what that would mean for available cash.

This is particularly important for growing businesses because growth itself can absorb cash. More stock, larger projects, additional employees and longer customer payment periods can all increase the amount of working capital required.

3. Is recruitment financially justified?

Recruitment decisions should be based on a clear understanding of the capacity problem and what a new employee is expected to contribute.

A £50,000 salary, for example, costs more than £50,000. For the 2026/27 tax year, employers generally pay Class 1 National Insurance at 15% on earnings above the £5,000 secondary threshold. On a £50,000 salary, that would mean £6,750 of employer National Insurance before pension contributions, benefits, recruitment fees, equipment or onboarding costs are considered. Employment Allowance may reduce the cost for eligible employers.

Management should then consider what the business expects to gain from that additional cost. In a revenue-generating role, that may be new sales or increased delivery capacity. In an operational or support role, the benefit may come from releasing senior employees to spend more time on higher-value work or reducing reliance on expensive external support.

Onboarding time should also be included in the calculation. A new employee may take several months to reach expected productivity, which means the financial benefit is unlikely to begin on their first day.

The useful question is not simply whether the business needs another person, but what commercial result that hire should produce and how management will measure it.

4. Which investments should happen now?

Planned investment should be reviewed before year-end, but the timing of the calendar should not determine whether money is spent. Management should first be clear about the problem an investment is expected to solve.

Consider a business looking at new software because employees are duplicating administrative work. If ten people each spend two hours a week on tasks that could be automated, that amounts to around 900 hours over a 45-week working year. If new technology could remove half of that work, the business would recover around 450 hours of capacity.

That provides something useful to compare against the cost of buying the software, implementing it and training the team.

A similar approach can be applied to premises, healthcare equipment, construction plant, machinery, technology and professional development. Management should consider whether the investment is likely to:

• Increase capacity
• Reduce costs
• Reduce risk
• Improve efficiency
• Improve customer service
• Support additional revenue

Tax treatment should also form part of the discussion. For qualifying plant and machinery, the Annual Investment Allowance is currently £1 million, which can allow qualifying expenditure to be deducted from profits before tax.

Tax relief can improve the economics of an investment, but the commercial case should still come first.

5. Where is the business overly dependent?

Some of the most important business risks may not be obvious from the annual profit figure, particularly where a company depends heavily on a small number of customers, employees, suppliers or referral sources.

If one customer represents 25% of annual revenue, losing that customer would remove a quarter of turnover. The remaining 75% of the customer base would need to grow by one-third simply to return revenue to its previous level.

The same issue can apply to people. One employee may hold much of the knowledge around a key process or customer. A founder may still be responsible for most major sales relationships. A business may also rely on one supplier for a critical product or a single introducer for a large proportion of new enquiries.

Management should identify the relationships, people and processes where losing one element would have a material impact on the business. That may lead to broader customer relationships, alternative suppliers, better documentation, cross-training or a more structured succession plan.

Not every dependency can or needs to be removed, but management should know where the significant ones are and have a plan for those that could affect the future of the business.

6. What decisions are being postponed?

Most businesses have decisions that remain on the agenda for longer than expected, and the final quarter is a useful point to identify which of those issues should be resolved before entering another year.

Pricing is a common example. On a £2 million recurring revenue base, a 5% change in pricing represents £100,000 of annual revenue before allowing for changes in customer numbers or sales volumes.

That does not mean every business should increase its prices by 5%. It does show why pricing deserves regular review rather than being carried forward each year without being tested against costs, customer demand and the value being delivered.

Other delayed decisions may include:

• An underperforming product or service
• A system that is no longer suitable
• Ownership or management changes
• Succession planning
• A senior role that no longer fits the business
• Unprofitable customers or contracts
• Premises that no longer suit the company’s needs

A useful exercise is to identify decisions that have appeared in management discussions more than once during 2026 and, where possible, put a financial value against the cost of leaving them unresolved.

There may be good reasons to wait. The important point is that postponement should be a conscious decision rather than something that happens because the issue is difficult to address.

7. What information will management need in 2027?

Management information is most useful when it helps the people running the business identify a problem early enough to do something about it.

The measures required will vary by business, but they may include:

• Revenue
• Gross margin
• Payroll costs
• Debtor days
• Cash
• Sales pipeline
• Profitability by department, customer, project or service
• Performance against budget

The figures also need to be considered together. If revenue rises while gross margin falls, the business may be winning work at the wrong price or seeing costs increase faster than sales. If profit is improving but cash continues to fall, working capital or debtor collection may need attention. If payroll increases faster than revenue, management may need to review utilisation, productivity or recruitment.

Different sectors will also need different measures. A healthcare business may monitor clinician capacity and room utilisation. A construction company may focus on job profitability, retentions, variations and project cash flow. A professional services firm may pay closer attention to utilisation, recovery and debtor days.

The purpose is not to produce more reports. It is to give management enough information to understand what is changing and decide whether action is needed.

Use the final quarter to shape 2027

Before 2026 closes, management should have a clear view of which parts of the business are generating profit, what its plans for 2027 are likely to cost, where cash may become tight and which decisions still need to be resolved.

A useful year-end review should not only explain what happened. It should help shape what happens next. Reviewing these questions before the end of the year gives businesses more opportunity to adjust plans rather than discovering problems after decisions have already been made.

How DSK can help

At DSK Partners, we work with business owners and management teams throughout the year, helping them understand what their figures mean for the decisions they are making.

That can include reviewing profitability, preparing cash-flow forecasts, assessing the financial impact of recruitment or investment, improving management reporting and working through longer-term issues such as pricing, ownership changes and succession.

The purpose of the year-end review is not simply to close 2026. It is to give management clearer information for the decisions that come next and a stronger basis for planning 2027.

Contact DSK Partners to discuss your plans for 2027.

Frequently asked questions

Why should businesses review their plans before the end of the year?
A year-end review gives management the opportunity to look beyond historic financial results and consider what needs to change for the year ahead. This may include pricing, recruitment, investment, cash flow, profitability and longer-term issues such as succession.

Does higher revenue always mean a business is performing better?
No. Revenue can increase while profit margins fall. Growing sales may require additional staff, subcontractors, equipment or overheads, so management should review profitability and cash generation alongside turnover.

Why is cash-flow forecasting important when planning for growth?
Growth can place additional pressure on cash. Recruitment, investment, tax payments and slower customer payments can all increase working capital requirements. A rolling cash-flow forecast helps management understand when pressure may arise and plan accordingly.

How can a business decide whether it is ready to recruit?
Businesses should consider the full cost of the role and the commercial benefit it is expected to provide. This includes salary, employer costs, benefits, equipment, recruitment and onboarding, as well as the time it may take for a new emp