It’s that time already: July. Six months have passed since the start of the year, and a lot has happened for your business (whether good or bad – hopefully good). If you followed our advice, you did quite a few things in Q1 to start the year off right.
We’re halfway through the year, and it’s time for a mid-year business check-in.
You might be:
- Crushing your goals and hitting all of your KPIs
- Missing milestones and goals
- Somewhere in between
If you need to change course and don’t take the time to review where your progress is right now, you may be one of the 90% of businesses that fail to meet strategic goals.
But don’t worry. You have the data available to you from the first half of the year to know what will likely happen in the third quarter of the year. And can begin making strategic changes right now.
We recommend that your mid-year check-in start with your goals before anything else to ensure that you’re on track to hit milestones, or at least can adapt to have a better chance of reaching them.
Items to Check-Off Your Mid-Year Business Check-in
Below are the items you’ll want to check going into the latter half of the year to ensure that you’re on pace to meet your goals and milestones, or if you’re not on pace, you have the steps to make corrections.
1. Goals
It’s time to:
- Review your short-term goals. Are you on track to meet them, or are you likely to miss your objectives?
- Review your year-end goals, too.
If it doesn’t look like you’ll be hitting your goals, what changes do you need to make to hit them for the remainder of the year? Business leaders should sit down with managers and sales teams to learn what’s happening behind the scenes and better understand the underlying issues that you won’t learn from the numbers alone.
And if you are hitting all your goals, pat yourself on the back and consider setting even loftier goals.
Perhaps you expect to grow sales by 10% this year and are well on track to beat this goal easily. Why not increase it to 15% growth?
Goal-setting helps push people to get more done and push themselves harder. You might ignite your team with new milestones because many people love to feel challenged and to push their limits beyond what they’ve achieved in the past.
2. Sales
Your sales are the backbone of your business’s success, so it’s only natural to check in on this key metric. A few questions to ask your sales team are:
- Where are sales now?
- What, if anything, is holding back sales?
- Can you do anything to assist in closing sales?
- What are they hearing in the marketplace,such as changes in demand or in customer desires?
Supporting your team, even when sales are exceeding expectations, will only strengthen your business in the long term.
If you do find that sales are below your target, you may want to consider increasing your marketing spend, offering sales team training or adjusting your pricing to drum up more business.
3. Profit Margins
Once you’ve analyzed your sales, you can start examining your profit margins. Are they as expected or off-target?
If your profit margins are down, the first question to ask is: Why? If costs are going up, is it time to raise your prices?
Consider other changes that you may need to make to get things back on track. How can you minimize costs?
For example, maybe you’re doing a lot of overtime labor, so higher labor costs are impacting your margins. Would hiring more people reduce your labor costs? Or is it a matter of inefficiency? If so, how can you support your team and make them more efficient? Can you streamline some processes, or utilize new technologies?
Maybe your labor costs aren’t the issue. Maybe it’s your material costs that are getting out of hand. In this case, review your current situation and see if you can find ways to reduce costs. For example, can you buy things in bulk to secure discounts?
Once you’ve analyzed and sorted your profit margin issues, it’s time to shift gears and review another important category of expenses.
4. Operating Expenses
Next, take a look at your operating expenses. Are they aligned with your budgets? If not, which categories are out of line? Where can you make adjustments to get back on course?
When analyzing expenses that are off course, consider whether:
- They are ongoing, or if there were isolated, one-time expenses that were unplanned.
- There’s room for negotiation on any ongoing expenses.
- There are any non-critical items that you can scale back or terminate, such as charitable contributions
Operating expenses are necessary, but it’s important to analyze everything with a fine-tooth comb and to reduce or eliminate any costs that aren’t explicitly necessary.
5. Cash Flow
Finally, review and analyze your cash flow. Is it in the positive or negative range? Are there shortages? If so, identify where your money is tied up, such as outstanding receivables, inventory, payroll, or low sales/profits.
Taking steps to correct cash flow problems now will save you from having to take drastic corrective action in the future. An estimated 82% of businesses fail due to cash flow issues, so this is one problem you can’t ignore.
Once you’ve identified the issue, create a plan to overcome shortages, such as:
- Running promotions to get rid of excess inventory
- Negotiating better payment terms with suppliers
- Optimizing and streamlining your collection process to get paid faster
- Taking out a line of credit
Getting your cash flow back on track will be crucial in meeting your financial goals for the year, so make sure you have a solid plan to overcome cash gaps.
Closing Thoughts
Conducting a mid-year check-in is a great way to gauge whether your business is on the right track to reaching its goals or if it’s time to realign things to get back on course. Analyzing the key metrics we discussed above will give you a clear picture of your business’s financial health and performance, but you may also have unique metrics that you want to analyze.
Once you have an idea of where you stand, you can make a plan to correct things that are off-course and finish the year strong.
And if you’re blowing past your original targets, this is a great time to up the ante and reset your targets and expectations.
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