It’s hard to believe that the year is officially halfway there. Life has changed since last year. Businesses are opening up, people are walking around without masks, and you might even be planning a vacation. Hope you can take a break and enjoy this summer.
But before you do that, why not take the time to do the housework in the middle of the year? I am a big supporter of approaching projects in small pieces. But, unfortunately, too many business owners wait until the end of the year to clean up different aspects of their business. At this point, it is a huge and overwhelming task.
If you give up some of these tasks now, you’ll thank yourself later. Here’s a workable checklist to help you out.
Remember, progress is not perfection
Before we begin, let’s think about the purpose of this review. It is not to shame or overwhelm you. It’s just about building awareness of your business, evaluating its performance, and enabling you to take corrective action while there is still time to make a difference.
A lot of business success comes down to little habits that are repeated over time. You need to focus on the habits that bring you closer to your goals and abandon the ones that no longer serve you. Remember, progress, not perfection.
Go to a quiet place and check how you feel
Paradoxically, the first element of action is a pause in the action. You’ll need to slow down, get to a place where you won’t be disturbed, and check out what you think of the business. This process should not be a haphazard and haphazard day. Instead, crash for a day, or a few if you can. Go to a quiet place for your opinion. (Some business owners go offsite for this.)
Once you are in this quiet place, ask yourself what you think of your business. For example, do you respect the objective and the vision of the company? Are you reaching your goals? Are you working the number of hours you want to work? Do you feel overwhelmed or anxious about the future of the business?
The father of life financial planning, Georges kinder, of the Kinder Institute of Life Planning, believes that emotions alert us to what we want to change and give us the energy to make that change. They can push us to act even when logical minds cannot. So don’t fight your emotions. Let them lead you towards a plan to make your life different.
You’ll want to set goals for yourself, but start by thinking about your successes and challenges. Celebrating your success can help you appreciate your progress and can give you insight into what is working. For example, have you been successful in securing ideal clients? Have you felt satisfied and fulfilled in the work you do?
When it comes to challenges and areas for improvement, you might find that you are falling short of some goals you set for yourself: Are you working too hard? Not enough income? Too many customers that don’t suit you? Are you not growing as fast as you would like?
I like the advice of Carl Richards, Certified Financial Planner, and creator of the NY Times Sketch Guy column: Goals are just guesswork. You cannot predict and in many cases control where you will be ten years from now or what the world will be like.
So instead of thinking that things must be perfect or that you can’t change your mind, pick a direction and take the next right step. What are the current obstacles or obstacles that are bothering you? What steps can I take to start moving in the right direction?
Evaluate your cash flow
Cash is the lifeblood of your business. Yet, so many companies act in such a way that they get by one way or another as long as you have enough income. You can even let your accountant tell you how you are doing. And while it’s essential to assess your income and customer portfolio, conquering cash flow requires thought and intentional systems.
The system that I like to use for myself and my clients is the Profit First System, developed by Mike Michalowicz. Rather than reading and using income statements, most entrepreneurs resort to “bank account balancing,” where we check our bank balance and make decisions based on what we see. This system focuses on exploiting this habit rather than trying to change it.
The system works by dividing the money into five different compartments:
- Owner’s comp
- Operating Expenses
All business income goes into the income account. And then, the 10e and 25e of each month, you break that income down into predefined percentages based on your actual trading income. Allocating your money in this way ensures that your business is profitable (because you are giving yourself a bonus each quarter). You also pay yourself a reasonable salary and have the money to pay your tax bill each quarter. Plus, it helps you become more efficient with your operating expenses because you can use a fixed amount.
Using this system allows you to continuously monitor how close you are to your income and profit goals and lets you know in real time when there is a problem. This system allows business owners to take control of their cash flow and become more intentional about it, and it’s easy to integrate because it accentuates the behavior we already employ. You can read more on the system here or listen my recent interview with Michalowicz.
Check your tax payments
You probably prefer not to think about taxes right now, but now is a good time to review your situation. By now, you should have already made two tax payments in (4/15 and 6/15). Even if you’re using the Profit first system, mid-year is a great time to check in with your accountant and see if you’re on track with the mid-year tax projections. He / she should be able to look at your income, do an annual projection, and help you estimate how much tax you should owe (or it could be a different person if your accountant and tax preparer are. other people)
You don’t have an accountant? Its good. You probably have some sort of accounting system in place, like QuickBooks, Wave, or Gusto. Then you can print out your profit and loss until the end of June, double the income, and use an online tax calculator to estimate what you owe.
If you find that you are behind on estimated tax payments, you still have six months to catch up. Just figure out how much you are missing, divide it by the remaining six months, and add that amount to your tax bracket each month.
Perform expense analysis
While you are reviewing your funds and your profits and losses, this may also be a good time to do an expense analysis. If you find yourself in a cash flow bind, there are two ways you can deal with it: increase sales and reduce expenses. And of these two, cost reduction is usually faster.
Michalowicz finds that most businesses can cut spending 10-20% overnight, “like frivolous costs like unused recurring membership fees, offices that don’t impress anyone, or that expensive car that is.” justified ”because it is an expense. “
To complete the expense review, print two items:
- Your expenses for the last six months
- All recurring expenses: rent, subscriptions, internet access, training, courses, magazines, etc.
Add up all the costs, then multiply that number by 10 percent. And then reduce that cost by that number. To do this, you’ll likely need to undo anything your business doesn’t need to run efficiently and keep your customers happy, or negotiate the remaining expenses.
Write the continuation
Going through the process itself should be very informative and lead you to be more intentional about the changes you want or need to make. It is essential to note these changes and develop the actions you wish to take to help achieve the new goals.
I suggest limiting the changes you want to make to two or three and writing the action steps as follows:
- What can I do about the obstacle I face?
- How am I going to do ?
- When will I do it?
- Who can hold me responsible?
- How do I feel it?
After completing the assessment, be sure to allow yourself some downtime to recharge your batteries for the second half of the year.