Use the half-year mark to get a pulse on how your business is doing and what’s needed to close the year out with a bang
With the ever-changing landscape of business, a mid-year financial check-in is now equally crucial in providing you with a 360-degree view into your business. The “if it ain’t broke, don’t fix it” adage is no longer applicable at the speed of technology and change known to us today.
More importantly, the survival rates of small and medium-sized businesses have been found to decline over time, making every second ever more precious.
According to Industry Canada:
- 85% survive the first year
- 70% survive the first two years
- 51% survive the first five years
By reviewing at the halfway point how your business is doing against the financial goals you set in January, you’ll have an accurate and current pulse on your business. And you can ensure that you will achieve your goals when the year comes to a close. Ready to get started? There are some things you’ll want to keep in mind.
Review your finances objectively
It’s been six months since you laid out your goals for the year. You and your team have set out with gusto and gumption. Now, let the numbers speak. If you’re relatively new to the process, there are three main financial statements that will narrate the state of your business.
This shows the business’ financial health in terms of what you owe and own. The total amount reflected on this statement equals liabilities and the owner’s equity.
This measures the profitability of your business. It typically represents revenue and expenses for a specific period and is typically aligned with a budget for year-over-year comparison and analysis.
This statement reveals how much liquid cash your business has and its movement. “Flow” refers to documenting the cash entering (inflows) and exiting (outflow) the business for different purposes, like loans, payments from sales or operational expenses.
Get help strategically
If the above sounds like a foreign language, you are far from alone. Many small and medium-sized businesses often deem accounting and related administrative tasks their least favourite. SMBs also feel they’re not in the financial position to hire an experienced CFO full-time. But that’s not necessarily true. Brad Celmainis, the founder of Brad Celmainis Accounting Solutions, is a “part-time CFO” based in Calgary. His specialization is to help startups and established businesses benefit from his experience on an as-needed basis.
“I’ve run things from both sides, having worked for big corporations and now managing my own business. Engaging a CFO or controller is a tactical move and does more than just make sure that your finances are in order. I look beyond the numbers, always looking for ways to help my clients add value to their businesses. And if there’s anything I can’t solve, I will find someone who can,” Brad summarizes.
The mid-year financial review may feel like a chore in the beginning, but done right, your goals will be aligned with the right actions and supported by the budget you need to stay on course and grow.