Why a Mid-Year Financial Check-Up Is Good Business

Small business owners typically begin a fiscal year with simple intentions: make more money, cut costs, avoid taxes, find new business opportunities and generate growth. 

Since the months have a way of flying by, scheduling a mid-year financial check-up is good practice. It’s an opportunity to evaluate the progress you’ve made and course-correct any potential financial pitfalls. 

This post looks at some basic but impactful ways to ensure your business stays on the most successful path.

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Update Your Books

Experienced business owners know that accounting and financial reviews should take place monthly. While a mid-year check-up is an excellent opportunity to assess performance in the market and make adjustments for the remainder of the year, the healthiest organizations have more frequent access to updated numbers and data. 

If you do not yet have a system in place or find that you continue to fall behind on monthly reporting, consider scheduling some time with your accountant, financial planner, or small business banker. They can share best practices for reviewing transaction records alongside bank statements, credit card charges, and sales receipts. Many business owners rely on a recurring calendar entry as a reminder to carve out an hour or two per month for reporting. 

Review Your Financial Statements

Running a business can be stressful. During a profitable year, there never seem to be enough hours in a day. Difficult years have the potential to induce financial anxiety. Regardless of your organization’s performance, a mid-year check-up helps you understand how profitable you are, whether you can take on more debt, and how healthy your cash flow is. 

To properly assess your organization’s health, you’ll need access to your year-to-date income, balance sheet, and cash flow statement. Here is a brief recap of what each document entails:

Income Statement – Much like a report card, your income statement indicates how your business performs over a specific time by calculating revenues, expenses, and net profit or loss. 

Balance Sheet – Business owners also need access to their organization’s financial performance on a specific date. They can locate this information on a balance sheet, which includes assets, liability, and equity. 

Cash Flow Statement – Every business needs cash. Cash flow statements help organizations understand where money is coming and going. Cash flow includes outgoing money like the cost of operations and working capital and incoming cash from sales or contracts.

According to a U.S. Bank study, 82% of businesses that failed cited cash flow problems as a factor in their failure. Cash flow doesn’t just mean the amount of money coming in and out. It refers to the timing of how money flows. For example, if you don’t pay your invoices until after your loans are due, cash flow could become a concern.  

Evaluate Your Spending

The mid-year mark is an excellent time to evaluate spending. Are there subscriptions that you no longer use? Do you have an understanding of how your variable expenses fluctuate over time or during different seasons? Now is a good time to factor in upcoming potential expenditures – like traveling to a conference or purchasing a laptop with more storage. If you need to replace equipment, be sure to keep your receipts so you can make itemized tax deductions. 

Invest in Learning

When business is buzzing, it’s hard to find time to invest in learning. But all busy seasons come to an end. A mid-year financial check-up is an excellent opportunity to earmark time to attend an upcoming conference or seminar. Networking with peers and gaining additional insight into industry trends is an investment in your business. Armstrong’s Annual Agent Conference is just around the corner, and we’re looking forward to providing our agent network with opportunities to meet new and familiar faces and attend engaging sessions. 

Want to Learn More? 

There are so many benefits to being an independent agency owner. You can make your hours, work at your own pace and take control of the commissions you earn. Of course, there are responsibilities, too, and the financial health of your business is one of them.  

Partnering with Armstrong gives independent agent owners access to unparalleled back-office support, affording you the benefit of staying organized and allowing you to focus on what you do best – running your business. If you’re interested in an opportunity with Armstrong, connect with us today. One of our agent recruiters will be in touch soon after you reach out.