Midyear of 2023 is here. It’s crazy that it’s the beginning of July. This is also a great time to perform a budget checkup to help evaluate how your business is performing and determine whether any adjustments should be made to ensure a successful year-end. Consider these key areas of your budget when conducting a midyear review:
- How are your year-to-date expenses and revenue aligning with your initial projections? Have you met your sales goals? If not, why not. That answer is more about how you will address the situation, not what actually happened. You need to focus on why your sales goals are off and make adjustments. Did your restaurant close for a week because of a burst pipe? Did you over-project sales? Did your store add new products earlier than planned? These are the things you need to get honest Next look at that hiccup. Eliminate unprofitable products or services that may be zapping your time. Look to see if you are pricing your product correctly. Verify that your marketing/sales plan is being followed. Now that you have the answers you can adjust accordingly.
- What is your cash flow situation? Too many businesses have been experiencing significant cash flow shortages due to cost fluctuations in supplies and, in some cases, slow-paying Consider performing your own cash flow analysis to help detect if there are any collection issues or whether you should revisit some of your vendor relationships or adjust your pricing. Most accounting software helps you do this. Look under reports and see what you can find. Once you’ve reviewed vital areas such as the actual costs of your inventory or supplies, vendor payments, and collections from customers, it will help you make the appropriate changes. You can also look at your customer’s average days to pay. Do you need to change your terms to make your collections situation better?
- Are there any adjustments you should consider from a tax perspective? A few areas to evaluate from a tax perspective include whether there have been any recent changes in tax laws, plans for capital expenditures, and tracking your quarterly tax payments to see if any adjustments should be made. With economic conditions changing so often, it’s a great time to review these payments rather than wait until the year-end. Now might be the perfect time to set up a meeting with your tax preparer to discuss your business needs.
- If you hire new personnel, there are more things to consider beyond salaries, such as their office and training costs. New phones, landlines or wireless? How about a desk, chair, or computer? How much training time is needed? What will the training cost? Are more supplies needed? Is there enough office space? Take a look at it all to make sure you can accommodate the new staff with a productive workspace.
Have questions or need assistance with your budget review, contact us today.