5 Step to Conduct a Mid-Year Financial Assessment

A mid-year financial assessment is the best way to evaluate whether or not you are on target to hit your goals. It’s also the perfect time to pivot if you’ve gotten off track. However, to point yourself back in the right direction, you have to know where you’re currently standing:

Check-in With Yourself. First and foremost, how are you feeling about your business at the mid-year mark? Do you feel like you’re on your way to achieving whatever it was you originally set out to achieve? If not, this is a great time to get clear on whether you’re running your business or whether your business is running you.

Revisit Your Budget. The mid-year check-in provides a perfect budget review opportunity. Take a look at what you forecasted for the year in terms of revenue and expenses.

Review Your Financial Statements. Profit and loss statements, balance sheets, and cash flow statements are standard financial documents to review during a financial checkup. Compare your financials right now to your financials from this time last year to trends and cycles.

Evaluate Your Goal Progression. Remember those goals you set for your business at the start of the year? It’s time to see where you’re at in meeting them. Whether you set concrete financial milestones or identified systems and processes you wanted to employ, take some time to see if you’ve made meaningful strides toward getting there.

Check-in On Your Taxes. This is a good time to make adjustments to your 3rd and 4th quarter estimated payments if you’re forecasting an increase in revenue for the second half of the year. If you haven’t made your estimated tax payments, then it might be worth scheduling an appointment with your tax professional. Putting off making tax payments causes unnecessary stress. Attending to taxes all year can make for an easier, less stressful spring.

Building good habits as an entrepreneur, like running a mid-year financial checkup, is critical to the success of your business. But habits aren’t always easy to establish or maintain. Maybe you don’t even know where to start. If your business needs support, contact us today to schedule a consultation.

How to Build a Business Emergency Fund in 8 Steps

An emergency fund is an essential part of a solid financial plan. It can help you pay unexpected expenses and avoid taking on more debt from high-interest credit cards or loans. You can build up your business cash reserve account in several ways:

Determine Your Needs. The first step is to determine how much you need in an emergency. Your needs will be unique, depending on your business. A rule of thumb, 10% of your annual revenue might be a good benchmark.

Set Reasonable Emergency Savings Goals. Start small so you can meet your monthly savings goal than struggling to hit a bigger number. Set small, achievable targets for your monthly savings, and increase the amounts when you’re comfortable that you can handle them without hurting your business.

Save Consistently to Build Your Cash Reserve Fund. As with any savings program, you need to put together a plan and follow it consistently. Commit to putting a certain amount of money aside each month. One of the easiest ways to do this is to save a percentage of your monthly revenue.

Automate Business Emergency Fund Savings. An effective way to build a financial cushion for your company is to open a separate account and set up a monthly deposit from your business account. Then savings can happen without requiring you to manually move the money each month.

When Business Is Good, Build Up Your Financial Cushion. When you have a good month financially and a better net profit, put a little extra into your emergency business funding until you reach your goal.

Check for Nonessential Expenses. Certain expenses are unavoidable. If you have a mortgage on your property, you need to make the monthly payment. You’ll need to pay utilities and employees if you want to stay in business. However, other items aren’t essential.

Protect Your Business Emergency Fund. It can be tempting to dip into your emergency fund for things that aren’t emergencies. Avoid the temptation to do that if at all possible.

Don’t Stop Building Your Cash Reserve Fund. When you reach your goal, take a breath and congratulate yourself. It’s a big step. Consider continuing to save and building your cash reserve fund to create an even bigger financial cushion.

Setting up a business cash reserve fund also provides peace of mind. You’ll sleep better knowing you have some money set aside to handle emergencies. If you'd like to learn more about how we can take managing your business finances off your plate and help you grow your business, schedule a call with us today!

Is Outsourcing the Right

Option to Grow Your Business?

Outsourcing helps you abandon the mindset of "I can do it all myself" and offload boring back-office tasks and hand them over to professionals with better expertise and reasonable costs.

Before outsourcing, consider:

If you can afford and have the monthly budget of the services

If the costs incurred by outsourcing benefit the business in any way

If you are equipped to handle the task on your own

If outsourcing helps you focus on the strengths of the business

Here are the advantages of outsourcing:

Increased productivity. Many entrepreneurs think they can do everything, but by eliminating the most time-consuming tasks, you can focus on tasks that make a huge difference in meeting the goals of your business.

More time. Time is a limiting factor, you can spend your valuable time dealing with more important tasks like providing the best customer service and improving your ROI rather than wasting your time managing your bookkeeping.

Expert services. Outsourcing allows you to hire an expert for a specific task without dealing with the risk of degraded quality. By outsourcing the right work to more qualified professionals, the books are handled timely and accurately than if business owners handled the same thing themselves.

Cost-effective. Recruiting and training people is expensive and time-consuming; there are other hidden costs to consider as well. You will be able to harness the expertise of a professional without breaking the bank or incurring high overhead costs.

Investing in other growth areas. Comparatively, it is much more affordable to get a task done by a professional externally rather than paying a monthly salary to a hired professional within the business. This increases your budget in other areas.

Outsourcing can bring significant benefits to the business. If you'd like to learn more on how we can help take managing your business finances off your plate and help you grow your business, schedule a call with us today!

5 Financial Reports You Should Track For Your Business

There are a number of financial reports that can give information on the business's past, current, and future financial state. The top five financial reports that every business owner has to regularly and yearly review to better understand the business's financial performance are listed below.

Balance Sheet. It provides a snapshot of a business’s financial position, including the economic resources the business owns or owes and the sources of financing for those resources.

Income Statement. It summarizes the total revenues and expenses incurred by the business, showing the profitability (net income or net loss) over a specified period of time, usually a month, quarter, or year.

Cash Flow Statement. It is presented in three sections: operating, financing, and investing activities, and it indicates which areas of the business are generating and using the most cash. One of the best uses for the Cash Flow Statement is to estimate future cash flow, which will assist with budgeting and decision-making.

Accounts Receivable Aging Report. It categorizes outstanding accounts receivable into groups based on the due date of the invoice, typically current, as well as 1-30, 31-60, 61-90 and >90 days overdue.

Budget vs. Actual. It can help identify areas that were over or under budget, indicating the ability to hire additional employees. The Budget vs. Actual Report should be prepared on a monthly basis and reviewed with the financial statements to determine if any areas of the business are not meeting expectations and should be investigated further.

We consistently provide timely and accurate financials and reports (like the ones mentioned above) on a monthly basis, as well as the actionable financial analysis you need to effectively run your business, analyze operations, and guide business decisions. If your business need support, contact us today to schedule a consultation.