As we celebrate the end of 2nd quarter and get ready to calculate our Profit Distributions, it also signals time to pause and relook at our plans for the rest of the year. A chance to review our annual goals, our TAPs (intentional money use target allocations), and to give our plan that 500 foot level review. A mid-year review can be empowering and here is how I walk myself and my clients through the process.
Profit First Celebration & Review
Before we celebrate just a little administrative housekeeping. So let’s make sure everything has been accounted for:
Close out your accounting through June 30th
- Make sure everything is entered; Still using your personal funds or credit cards? Make sure they are entered and tracked, it’s all part of the cash flow story your business wants to tell.
- Reconcile your bank accounts; yes, even if you are using QBO bank feeds reconciliations are necessary because technology doesn’t work 100% of the time
- Review the activity for your customers and vendors – if what’s showing isn’t accurate, take the time to fix it now. We check these areas out to verify items aren’t double recorded in the system.
Review your target allocations for the quarter. If you didn’t make one during this quarter, this is your chance to make it up. Or perhaps you choose to wing it one time, now you can recalculate for the quarter and adjust as needed. Add up your total deposits for the quarter times your TAPs and double check the amounts in your Profit and Tax accounts.
Now you are ready to celebrate! As a reminder here are the rules:
- Look at your Profit Account and find the bank balance as of the last day of the quarter.
- Times it by 50%
- 50% will STAY in the Profit Account, which is becoming your rainy day or cash reserve account;
- AND the rest is YOURS – cut yourself a check or withdraw the amount in cash
Remember, the only catch is it cannot go back into the business or be used to pay personal bills. It must be used for FUN! If you have checks, cut yourself one to represent that exchange of energy. I personally, had a better energetic exchange and reward by going to the bank and getting it in cash. I felt that a check would be too easy for me to repurpose back into personal bills, where cash was easily transferred to something fun – like a massage.
CONGRATULATIONS you have a profitable business that is supporting YOU!
Quarterly TAP Adjustment
Adjust your Target Allocation Percentage (TAPs) – Slowly increase you TAPs towards your ultimate goal. No more than 3% increase on all TAPs (original goal for profit TAP is 15% and this can go higher based on your operating cash needs). If you are just getting started remember that slowly and consistently we make adjustments to our habits so we can have business changing results.
500’ View Mid-Year Review
At the beginning of the year you created a budget, aka the plan. You had an idea of where you wanted to go. A mid-year review gives you the opportunity to take a step up, to that 500’ level, and look down at what you have accomplished so far. With your original goal in mind and where you are currently at, what will it take to get you to the finish line?
For example, if your goal was $200k in revenue and you are sitting at $60k through June, what will it take? Simple math says if you do nothing you won’t reach that goal, you’ll fall short. When you set the goal you had a plan. You knew exactly what it would take – how many customers at what rate or package. So let’s break it down, tell your ego to go sit down for a minute because you’ve got this.
To fill the $140k gap over the next six months that is $23k roughly a month and yes that is two times what you are currently doing. Don’t focus on that, focus on how to make up the $13k difference. How many more clients to fill that each month? If your package is roughly $1k/month that is 13 new unique customers. If you were mentoring with me I would ask you about time constraints and more importantly have you look at your pricing. If your price point is $1500/month then it’s 9 customers. Easy button says RAISE your rates! Most times what I find is that raising your rates will be necessary because you didn’t add a profit margin or are covering your new costs (I know this firsthand because I wasn’t). To do that part successfully your roadblock will be around value. If you don’t believe in the value you deliver, no one else will either and that gap won’t be filled. So now that you know the easy math to get where you want to go, go back and clearly identify the value and results you are delivering and tap into that feeling that you create change. THAT energy you are feeling is what your customers ultimately want to tap into and will pay you for.
Take a good look at everything at this point, not just sales – focusing on sales alone won’t pay down our debt or put more money in our pockets. It is important and what helps us leverage everything else in our business and as the owner and CEO it is your #1 job. So you may need to look at where you are spending your time. I also want to look at your spending plan to make sure nothing has changed.
Now adjust your budget, which is your spending road map for the rest of the year. It’s not carved in stone, and no one else cares if you adjust it. Taking the time to match your plan to your financial goals is important if you want to successfully reach them.
Do You Have Accountability?
What I found for myself, while I have my accounting dialed in for the quarter and reviewed my plan to consistently and steadily push myself to reach higher and higher, I need outside accountability. For me that is a coach and an accountability group. Someone I tell my goal to. Someone that helps me break through the roadblocks that get in my way. Someone who doesn’t judge, doesn’t come in to slay my own dragons, and energetically reminds me of what I’m moving towards. If what you have been doing isn’t working then it may be time to create an accountability support system for your business.
Take a moment to pause and celebrate where you are at, mid-year with a profitable business and revised plan on how to meet your goal. Remind yourself where you started and the successes you have achieved these last six months. Have fun with your profit distribution and then work the plan you made. I’m going to do the same exact thing in my business as I’ve outlined above. While we may not be physically walking the same road, know that I am walking beside you using the same tools, encountering roadblocks, and fighting off time vampires. Have a particular interesting topic you’d like me to address? Connect with me and let’s do this together!
If you are finding that you could use a little accountability support with your Profit First efforts then let’s chat about the options available and how they will fit in with your journey. Here is an online form to get started.
[a]Got a A+ but you can adjust if you creatively connect with it