Ready for your Mid-year Review?

Well, it’s that time of year for business owners to consider doing a Mid-Year review.

What is a Mid-year review? It’s stopping to catch your breath long enough and taking an objective look at your business – how the first half of the year was and how you expect the second of the year to be. A mini Strategic Planning session, if you will.

A Mid-year review involves looking at all aspects of your business including:

  • Financial results – How did they compare against budget? How are your ratios and KPI’s vs. expected results? Most importantly, how is you Cash Flow?
  • HR – When was the last employee survey taken? Are your employees working well together? Is turnover at an acceptable level?
  • Sales & marketing – Has revenue met your expectations? Have you identified why variances exist? Is your revenue mix in line with your goals or should you make some modifications to your marketing efforts to focus on higher ROI products/services?
  • Operations – Are your products/services being delivered timely? Have your margins changed/costs increased (i.e. service & installation costs)? Have quality or customer satisfaction changed?

Lisa Wood from New Sprout Media asked the quintessential question in her blog – Are you on track?

You have goals, right? How well are you doing relative to your goals? I can’t think of a better way to frame the reason to do a Mid-year review.

According to John McAdam in his article on this subject, a Mid-year review includes the following:

  • Evaluate performance
  • Reallocate resources to better achieve goals.
  • Make more money than you would have otherwise.
  • Take stronger corrective actions than you would have without a mid-year review.
  • Provide leadership for your team—too much silence taxes milestone goals.
  • Offer focus for your team.

John points out that taking time to do this is essential and, I would add, one of the most rewarding and enlightening strategic exercises you can do for your company.

Daniel Dreher points out in his article that you can achieve better focus and reap the following benefits:

  • Reviewing now provides more time to implement changes.
  • You can act while other businesses are procrastinating.
  • You probably have a good idea of how the year is going.
  • A review offers an opportunity to re-grip the reins.
  • Nothing good comes from waiting for more numbers.
  • Opportunities may exist now that will disappear later.
  • There’s no better time to re-energize employees.

Daniel adds that this exercise will help you focus and put your company in a better position going forward.

One critical item I’ll add is don’t forget the What, Who, Where, When, Why and How questions.

As with any exercise in planning, make sure you plan the discussion/meeting upfront and allow sufficient time and input to have a great result. Contact me, Andrew Tucker, for help with this process or other aspects of your business. I can be reached by e-mail at andrew@aetuckerconsulting.com or by phone at 704-651-2216.

Tags: CFO, business tips, Chief Financial Officer

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What financial statements should you monitor?

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As business owners, you are tasked with acquiring new customers, managing your team, launching new products and countless other tasks. Let’s face it – most of us simply don’t have time to focus on our financial statements daily – or even weekly.  However, businesses need an effective system for conducting operations, complying with tax laws and providing essential financial information – especially to lenders and outside investors.

Think of monitoring your financial statements like monitoring your vital signs. Understanding the health of your company by utilizing timely and accurate reporting is a key tool that allows you to measure how the business is performing in terms of cash flow, sales growth, profit margin, and expense management.

So, what statements should you monitor? The Balance Sheet and Profit & Loss statements should be well known to every business owner, but many owners do not pay attention to the Cash Flow Statement which may be the most important statement. Close attention should also be paid to Accounts Receivable and Accounts Payable reports, and, of course, to your bank statement.

Steps to Ensure Your Financial Books Are in Order

Whatever size your business is, this Financial Checklist can help you get into the discipline of monitoring the above statements to ensure consistent financial health—and even spotting warning signs before cash flow emergencies strike.

Financial Records Checklist

  • Reconcile your bank accounts on a monthly basis; ensure deposits and cash receipts have been posted accurately and in a timely manner.
  • Cross-check daily sales log and cash receipts.
  • Review accounts payable each week – take advantage of discounts, if possible, and pay your  bills on time.
  • Monitor the status of accounts receivable weekly to check on past due invoices.
  • Inquire about unpaid invoices that are past due and address the issue in a timely manner.
  • Review your payroll and administrative expenses weekly.
  • Monitor any taxes due (federal, state, sales and property tax) to avoid fines and penalties.
  • Track the results of your marketing efforts – how much income is generated by marketing.
  • Review all account balances to ensure that transactions are properly posted and adjusted as needed.
  • At year end, prepare for 1099’s due in January. Begin to organize your W-9’s in December to avoid being rushed come January.

One of the ways I can help business owners is by taking tasks off the business owner’s to-do list. This helps them be more productive in the quest for new customers, opportunities and products. All business owners want more time to focus on the business and future goal-setting. Yet, too often business owners get stuck doing what we call administrative tasks instead of higher level tasks.

Business owners should be leading the business with ideas, plans and developing the culture to make the business successful. Administrative tasks are necessary (accounting, cash management, financial statements, internal procedures and controls, etc.), but if too much time is spent on these by the business owner, the business may suffer. What affects could this have on you and your business?

Is it time to use your financial statements to operate your business better? Please contact me by phone at 704-651-2216 or e-mail at andrew@aetuckerconsulting.com and see how I can help.

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