Business Performance Charts for Mid-Year Planning

A Business Owner’s Guide to Mid-Year Planning

As the year approaches a close, it's an ideal time for business owners to evaluate their company’s financial health. Mid-year planning is critical and can help establish a confident foundation for the future. However, for many business owners, this planning can feel overwhelming. This guide aims to help manage the planning process using the following step-by-step approach.

Step #1- Review the past year's financial performance

Reflecting on this year's financial performance before the start of the 4th quarter can provide valuable insights. This reflection involves reviewing profit and loss statements, balance sheets, and cash flow statements. A comprehensive performance review can help identify trends and uncover the strengths, weaknesses, and opportunities for the rest of this year and the year ahead.

Step #2- Conduct Tax planning

Mid-year tax planning involves understanding current tax laws and determining suitable strategies to minimize tax liability. Reviewing expenditures and deductions, retirement plans, and potential tax credits can help work toward effective tax planning. Seeking guidance from a financial or tax professional can help business owners identify and take advantage of available deductions.

Step #3- Analyze cash flow

Analyzing cash flow is a key component in mid-term planning, as it helps business owners forecast the company’s future financial needs. Identifying peak and low cash flow periods enables the management of expenses and investments appropriately, working toward a more stable financial position.

Step #4- Plan for future investments

As part of planning, consider future investments such as new machinery, product development, employee training, or expanding into new markets. These investments can stimulate growth and enhance the company’s competitive advantage.

Step #5- Make a plan to manage debt

Business owners often take on debt to grow their company. However, unchecked debt can be harmful. Year-end is an ideal time to assess the company’s current debt levels. Evaluate terms and interest rates, explore refinancing options to lower costs, and develop a plan to reduce debt steadily.

Step #6- Set goals for the New Year

Setting goals before the New Year provides a roadmap for the company's financial success. These goals include increasing profits, reducing costs, or improving cash flow. Make sure these goals are SMART—Specific, Measurable, Achievable, Relevant, and Time-bound.

Step #7- Create a new budget

Once the company's financial goals are determined, create a budget that aligns with objectives and includes a detailed plan for income and expenses. A well-planned budget helps keep the company financially healthy and supports informed decision-making throughout the year.

Step #8- Consult professionals

It's beneficial to seek professional advice to determine whether the company is progressing toward continuity and growth. Financial and tax professionals can provide guidance and outline strategies tailored to the company’s and the owner’s needs.

In conclusion, mid-year financial planning is an essential routine that sets the stage for the upcoming year, involving reviewing, reflecting, and strategizing for a financially independent future.

Past performance is not indicative of future results. The material above has been provided for informational purposes only and is not intended as legal or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed, and J. Martin Wealth Management makes no representation or warranty as to the accuracy or completeness of the information, which should not be used as the basis of any investment decision. Information contained on third party websites that J. Martin Wealth Management may link to are not reviewed in their entirety for accuracy and J. Martin Wealth Management assumes no liability for the information contained on these websites. Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of writing and are subject to change without notice. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission from J. Martin Wealth Management. For more information about J. Martin Wealth Management, including our Form ADV brochures, please visit https://adviserinfo.sec.gov."