How to do a Business Financial Review Mid-Year
As we approach the mid-year point in 2022, this is the perfect time for small business owners like yourself to reflect on the status of your fiscal health and make the necessary adjustments to achieve your financial goals. It is during this time that you should evaluate what is working and how you can be more firmly on target to meet your year-end financial benchmarks.
You can accomplish these tasks by undergoing a mid-year business financial review. We encourage you to utilize a business financial review to give yourself a reality check and perform an objective assessment. This will tell you how to improve your company’s performance during the second half of the year.
Purpose of a Mid-Year Business Financial Review
The objective of a business financial review at the mid-year point is to create awareness of your business, evaluate its performance, and enable you as the business owner or manager to take corrective action while you have adequate time to make changes.
Much of your success as a business comes down to small habits repeated over time. What you need to do is be laser focused on the habits that allow you to reach your financial goals and do away with the habits that do not offer a sufficient return on investment.
Ways to Perform a Successful Business Financial Review
Conduct an Expense Analysis
This review offers an ideal time to do an expenses analysis. For example, if your business is facing a cash-flow difficulty, there are two methods for resolving that. They are increasing sales and decreasing expenses. The fastest method is reducing expenses.
You will need the following things to carry out the expense review:
- Any recurring expenses, rent, subscriptions, training, classes, Internet access, and magazines, etc.
- Your expenses for the past six months.
After you total up the costs, you will multiply that number by 10 percent. You then reduce that cost by that number. In order to do this, you will probably need to cancel whatever your company does not need to operate efficiently, and maintain excellent customer satisfaction or negotiate any remaining expenses.
Factor in Business Goals
Your business goals are a snapshot of the stage your business was in when you established those goals. They may need to be adjusted occasionally. The mid-year business financial review is the perfect time to modify goals with the hopes of having a successful year.
It is important to note that businesses evolve and change for various reasons. For instance, you may have a contract that is coming to a close, or you may have made modifications to the vision for your company.
When it comes to your business goals, consider the following factors:
- What have you accomplished up to this point in the year?
- Has your business missed any milestones, and why?
- Are your goals still relevant?
- Are there any new priorities that require new goals?
Evaluate Your Cash Flow
Cash flow is the most important component in your business operation. Unfortunately, too many companies simply overlook their cash flow, as long as they have revenue coming in. Assessing your cash flow requires that you consider some important points, and they are:
- Are your expenses being managed appropriately?
- Are there any collection issues that require attention?
- Is it the right time to raise your prices?
If your small business is struggling, you might think about cutting your business expenses or making changes to your products or services to realize more revenue.
Remember that your cash flow statements enable you to evaluate your working capital. By factoring in your cash flow for your mid-year business financial review, you will see precisely where you need to improve your operations so you are able to preserve cash and increase your inflow numbers.
Include Strategies and Methods
For your mid-year business financial review, your bottom-line benefits by scrutinizing your strategies and methods for the first half of the year. Assess what is working well and why. Then you need to accurately identify weak points in your operation. For example, a certain marketing channel is not converting, or a partnership you made is consuming a lot of resources, but it isn’t delivering a good return on investment.
You have plenty of time to modify your strategies and methods so your business experiences a profitable 2022.
Look at Your Tax Payments
Your mid-year business financial review is the perfect opportunity to assess your tax situation and confer with your accountant to make sure your business is on track with your mid-year tax projections. Your accountant needs to examine your financial review, and then make an annual projection, and assist you in estimating how much tax you will owe.
Even if you are behind on your estimated tax payments, you have a half year to catch up. You want to use these six months to make sure that you lower your tax obligations as much as possible. This is where your accountant comes in. She will work closely with you to identify where the numbers just aren’t adding up and put your business on track for a successful year when it comes to limiting your business’s tax burden.
A Mid-Year Financial Review is Beneficial for Your Business
A financial review will shed light on where you are wisely spending money and pinpoint the places that need improvement or should no longer be continued. When you perform a comprehensive mid-year financial review, you will be able to maximize the return on your investments. This will lead to a healthy bottom line that includes a strong profit margin.
Look to PorterKinney for Exceptional Quality Accounting Services for Small Businesses
PorterKinney is a premier accounting CPA firm located in the Tri-Cities, WA, which specializes in strategic tax preparation for businesses, rental properties, estates and trusts.
In addition to tax preparation, we also offer bookkeeping and payroll services, as well as a variety of business consulting services. Our business tax and accounting experience covers a wide range of market segments, from farmers’ fields to physicians’ offices.
Have you thought about how much time you spend each week trying to keep track of your business expenses and income? Many small business owners can save time and money by outsourcing their accounting to PorterKinney.
If you are interested in using any of our accounting or business consulting services, we invite you to contact us on on our Website. You can also call us at our two offices in the Tri-Cities: