The Mid-Year Financial Checkup: 6 Questions Every Business Owner Should Answer in July

It's July. You're six months into the year, busy season is in full swing for a lot of Wisconsin businesses, and the last thing on your mind is sitting down with your financials.

That's exactly why you should.

The middle of the year is the single best time to look at your numbers, for one simple reason: there's still time to do something about what you find. Spot a problem in July and you have six months to fix it. Spot it in January, when your accountant is closing out the year, and all you can do is write the check.

You don't need a full audit. You need an hour, your year-to-date financials, and honest answers to six questions.

Pull up your year-to-date revenue and profit, and put them next to whatever plan you made in January — even if it was a number scribbled on a napkin.

If you planned $1.2M for the year, you should be somewhere near $600K by now (adjusted for seasonality — a landscaping company and a snow removal company have very different Julys). If you're at $480K, that's not a reason to panic. It's a reason to ask why, now, while a strong second half can still close the gap.

And if you didn't make a plan in January? Your first-half actuals just became your baseline. Write down what you expect the second half to look like. That's a plan.

Revenue gets all the attention, but margin is where the truth lives.

Compare your gross margin percentage for the first half of this year to the same period last year. If you ran 42% last year and you're at 37% now, that 5-point slide on $600K of revenue is $30,000 that quietly left the building. Usually the culprit is one of three things: your costs went up and your prices didn't, your mix shifted toward lower-margin work, or jobs are taking longer than you're billing for.

Every one of those is fixable in the second half. None of them is fixable in December.

Profitable businesses run out of cash all the time — usually because the profit is sitting in accounts receivable or inventory instead of the bank.

Look at your cash balance today versus January 1, then look at your profit for the same period. If you earned $80K on paper but your bank account only grew $15K, find the other $65K. It's usually in customers who haven't paid you, inventory you bought ahead, debt payments, or owner draws. None of those are necessarily wrong — but you should be able to name them.

Print your accounts receivable aging report. Anything over 60 days deserves a phone call this month, not a strongly-worded invoice footer.

Here's the uncomfortable math: if your net margin is 10%, a $10,000 invoice you never collect wipes out the profit on $100,000 of sales. Collections isn't administrative work. At most margins, it's the highest-paid hour of your week.

If your first half was stronger than last year, your quarterly estimated payments — which are usually based on last year — are quietly falling behind. The Q3 estimate is due September 15. July is when you find that out calmly; April is when you find it out expensively.

A 15-minute conversation with whoever does your taxes, armed with your actual six-month numbers, is all this takes.

This is the question the first five build toward. Based on what the numbers just told you, what are the two or three things that must happen between now and December? Raise prices on the line of work that's dragging margin? Collect the $40K sitting past 60 days? Hold off on that hire until Q4?

Write them down. Three specific moves beat ten vague intentions every time.

None of this is complicated. The hard part is that answering these questions requires books that are current and accurate — and for a lot of owners doing $500K to $2M in revenue, the books are three months behind and nobody's quite sure what's in "Miscellaneous Expense."

That's the real cost of messy financials. It's not the bookkeeping itself — it's the decisions you can't make because you can't see.

If you'd like a second set of eyes on your mid-year numbers — or you'd like to have books clean enough to do this checkup in an hour instead of a weekend — that's exactly what we do at North Arrow Financial. Book a call and we'll walk through your first half together.