Reviewing the first half of the year
June is a good month to review the position of your business in relation to the financial goals you set out to achieve at the start of the year.
A first step is to take a look at your half-year financial position once June’s management accounts have been completed.
Review financial statements
Review your firms’ updated budget, profit and loss statements and cashflow forecast.
Assess if you have reached your profit target for the first half of the year and if not then identify the reasons why.
Look at your sales and identify if you have reached your targets or if you have lost any major customers.
Have you won new business at the rate you expected to? If not, what are the reasons for this?
Check the costs of the business. Have there been any big expenses that were not budgeted for? If so, are these one-off costs or are they likely to recur?
Are your staff being fully utilised or are you having to turn business away because you do not have the resources to take on new work?
Addressing the problems
Once your business has established the current position, the foundations are in place to address any problems identified from reviewing your financial statements.
If sales and profit are higher than expected then try and establish why so that you can capitalise on this.
If sales and profits are below budget, equally, by establishing the current position of the business and how this has been arrived at, your firm is in position to put in place remedial action.
The results of your review will quickly identify what is required to reach your financial targets.
This could be investing in plant and machinery or extra staff or it could be cancelling expensive contracts and services that are not providing sufficient return for your company.
Alternatively, if new business levels are lower than anticipated, you may decide to spend more money on advertising or finding new customers.
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