Forecast Mid-Year Review- Things to Keep in Mind

If this is close to the middle of your company’s fiscal year, then it is an ideal time to take stock of how things are going in the company by doing a mid-year review.  “Things” cover everything from A to Z including a forecast and there is a priority to them.  Here is my prioritized list for your consideration:

  1. Compare the year-to-date numbers on your P&L to the year-to-date numbers for your budget and identify revenues and expenses that are doing 10% or more worse than budget. Then investigate each one and understand what caused each of those variances
  2. Create a P&L forecast for the full year and compare the forecasted bottom line for the full year with the full year bottom line of your budget. Does the forecast indicate that you are on track to out-perform your budget or not?  If not, why not?   This is an important question that you need to know as the owner of the business.  Also, if you have investors and /or lenders, they will want to know why as well.   If the forecast indicates that the company will not meet expectations as defined by the budget then you should understand not only the why but also figure out how you are going to get the company back on track.
  3. Create a balance sheet forecast for the balance of the year. With the P&L forecast and the balance sheet forecast, you can then create a cash flow forecast.  This is the real meat & potatoes of the business so to speak.  Review the cash flow forecast to identity any months where cash will be tight then go back to your spending and revenue estimates and modify them until cash flow is strong for the balance of the year.
  4. If your company tracks jobs, then update your job cost reports so that you can see how each job is performing compared to its original estimate. Identify jobs that are way off the mark and figure out how to get them back to the level of profitability you originally expected.
  5. Review any, and all, open project improvement efforts that are active and hold the leader of each project accountable for giving you an honest status report and for delivering results.
  6. Finally, take a hard look at all internal processes and the people who are working them. Ask yourself if each process is efficient and adding value.  Are there any tasks that are being done routinely that add little or no value?  If so, put a stop to them.  If there are staff members who aren’t delivering up to your expectation, find out why and don’t be afraid to replace them or to address any legitimate issues that may be preventing them from doing their jobs well.

That’s my list. It’s a big one but the middle of the year is an ideal time to take stock of where you are so that you can make good and timely decisions to adjust course as necessary.  In doing so you will increase the odds of a successful year dramatically.  And, your investors and lenders will be happy to see what you are doing.

photo credit: Dave Dugdale Analyzing Financial Data via photopin (license)

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