Question of the Week
Your 2022 Mid-Year Review
Happy Friday, all!
It’s that time again! I got such great feedback from last year’s MDB podcast mid-year review that I’m doing it again.
In this special episode, I share practical steps for conducting a mid-year review that sets you and your business up to thrive in the year’s second half. You’ll learn how to clean up some of your central tasks to ensure the end of 2022 and the beginning of 2023 is as stress-free as possible. You’ll also hear why I advocate for small habits repeated over time and the benefits of taking a mid-year pause.
Here’s a summary.
This year may feel incredibly stressful for fans of Mission Driven Business, and one way to find calm in chaos is to focus on what you can control. For small business owners, that can mean tackling some of the big, end-of-the-year tasks by conducting a mid-year review.
“Unfortunately, too many small business owners wait until the end of the year to clean up the different aspects of their business. By that point, it’s a numerous and overwhelming task, so let’s knock out some of these tasks now.”
Step 1: Review your successes and challenges.
Once you’ve gotten clear on your emotions, it’s time to review your successes and challenges. This pause is a great time to celebrate your accomplishments, appreciate your progress, and gain insight into what’s working and what areas could use improvement.
“Instead of thinking that things need to be perfect or that you can’t change your mind, pick a direction and take the next right step.”
Step 2: Review your business cash flow.
Cash flow is the lifeblood of your business, and conquering cash flow takes thought and intentional systems. One good cash flow system is Profit First, which leverages entrepreneurs’ natural tendency to make decisions based on their bank account balance.
“Using this system allows you to continually monitor how close you are to your targets for revenue and profit and lets you know in real-time whether there’s a problem.”
Step 3: Review essential reports.
A new step on the mid-year review checklist is to review your essential reports, which include your balance sheet, reconciliation reports, and profit and loss statements:
- Your balance sheet covers your assets, liabilities, and owner’s equity.
- Your reconciliation report ensures what’s in your accounting software matches your bank statements.
- Your profit and loss statement thoroughly allows you to review the year’s first half.
Step 4: Make tax projections.
You’d probably rather not think about taxes, but the mid-way point in a year is an excellent opportunity to review your tax situation. You’ve already made two estimated tax payments and can track where you are and make projections.
“If you find that you’re behind on estimated tax payments, you still have the year to catch up, calculate how much you’re short, divide that by the six remaining months, and add that amount to your monthly tax bucket.”
Step 5: Analyze your expenses.
After reviewing your buckets and profit and loss statements, it’s an excellent time to analyze your expenses. To do this, print your expenses for the last six months and any recurring expenses. Then, add up all your costs, multiply that number by 10%, and cut expenses by that number.
“Remember that just because you have a tax deduction for expenses, you still lose money if you’re purchasing something you don’t use.”
Step 6: Write down your next actions.
As you perform your mid-year review, you’ll likely gain insight into the changes you want or need to make. It’s essential to write these changes down and develop an action plan with the steps you’ll take to accomplish your goals. Try limiting the changes you want to make to two or three goals.
Quote of the week
“You’re more likely to find success taking little steps each day rather than trying to run several miles simultaneously.” – me!
Task of the week
Take some time and space this weekend to conduct your mid-year review. Your future self will thank you. Here are some additional resources that can help you.
- Episode 7: Being Profit First with Mike Michalowicz
- Episode 8: Eradicating Entrepreneurial Poverty with Ron Saharyan
- Episode 14: Living Your Passion with George Kinder
- Goals are only guesses, Behavior Gap / Carl Richards / The Sketch Guy