Halfway through the year is the perfect time to check in on your business to make sure you're on track for success this year. A mid-year review allows you to make moves that will help your business thrive for the rest of the year. Continue reading below to learn about midyear moves to make for your business.
Evaluate Your Cash Flow
Cash flow is what keeps your business alive. Without cash flow, your business would fail. When evaluating your cash flow, you can not only look at how your money is coming in but also how it is going out. You will have to look at your revenue, profit, owner’s draw, taxes, and operating expenses. By taking these several pieces into account, you will be able to get a raw view of how your business is doing financially. By knowing how your business is really doing financially, you can begin to make positive changes to improve your business’s financial wellbeing.
Check In On Your Tax Payments
While you may not think about taxes until tax season, you should keep taxes in mind year-round. Halfway through the year is the perfect time to revisit your taxes. By midyear, you should have already made your first and second quarter tax payments to the IRS. If you do not partake in quarterly tax payments, you can look at your tax projections to make sure you are on target for your estimated tax payment.
To do this, you can check in with your accountant or tax preparer to assist with the tax projections. If you do not have an accountant or tax preparer, you can use your profit and loss statement for your bookkeeping system. Take your profit and loss statement through the end of June, double your income to replicate your year’s profit, and use a tax calculator to get an estimate of your tax liability.
If you are on target for your tax payment, good for you! If you are behind on estimated tax payments, you have time to formulate a plan to catch up to make sure you’re ready for the next tax season.
Audit Your Expenses
The last thing you want to be doing is wasting revenue and profit on unnecessary expenses. If you’re having a cash flow issue, there are two fixes: either increase revenue or decrease expenses. Decreasing expenses is typically the path of least resistance.
The best way to perform an expense audit is to print out your expenses over the last six months and any recurring expenses, such as rent, subscription services, utilities, professional development, technology, and more. This way, you have a clear view of everything you are paying for and can categorize it as necessary and unnecessary. Unnecessary expenses include any that your business does not require to run successfully.
Look At Your Reserves
If you do not have any reserves set aside for your business, it's time to start saving. It’s important to keep a cash reserve on hand in the event of an unexpected expense. As a business owner, if you do not have reserves within the business, you may have to delve into your personal savings to keep the business afloat. Aim to save 6 months to a year worth of necessary expenses. You can start saving by including reserve savings within your operating budget as if it is an expense.
Analyze Your Infrastructure
Is your business operating the best that it can be? It is important to take a look at how your technology, software, and tools are working for your business. You will most likely find areas that could be improved by a new operating system or a software upgrade. While you may not be able to immediately invest in these changes and updates, you can at least be able to plan out for these improvements.
Set Your Goals For The Rest Of 2022
While you need to focus on the present when running your business, you also need to be forward-thinking. By setting goals for the rest of the year and the upcoming years, you can be more intentional when running your business. When writing your goals, you will need to create action steps to help you achieve your goals. Setting goals will allow you to have the motivation to keep your business moving forward in a positive direction.
Handling the finances of your business can be difficult to take on while you’re focusing on making your business successful. If you need assistance in tackling midyear moves to make for your business, our financial advisors at Maven Bridge Capital are here to help. Schedule a consultation with us today to get started.
Sources:
https://plack.com/business-owner-mid-year-reset-6-simple-changes-to-make-now/