The Midyear Gap

Dear Business Owner,

I was sitting with a business owner going through her monthly report. She started the conversation with "I spent too much money, didn't I?"

She had not looked at the numbers in months however she felt like everything was going fine because money was coming in. But when we actually opened the books, about 80 percent of her inventory had been priced below what it cost her to carry it.

I get to talk to a lot of business owners and many I talk to are busy. Really busy. But busy and profitable are two different things, and the space between those two words is where the second half of the year either works or doesn’t.

Do you know the difference between what you are making and what you are keeping? Not a ballpark figure but an actual number.

One of the business owner answered that question in a class I was facilitating by stating “I don't know. I don't know how to tell you how I’m doing financially. I just know how it feels." She ran a whole business, showing up every day, working hard and basing success off of a feeling. She just did not have a clear picture of where she actually stood.

Believe it or not, this is not an exception. In many cases this has become the rule.

What I know from working through financials month after month is when the picture gets clear, something shifts. The same business owner who did not know how she was doing figured out that 80 percent of her inventory was underpriced. She realized that on her own in a single session.

That is what clarity does. It gives you feedback so that you can make informed decisions about the next step toward a successful month, quarter or year.

So do yourself a favor and pull your profit and loss for January through June. Look at your three biggest expense categories. Ask yourself whether each one is producing a return you understand and chose on purpose.

This thirty minute exercise will tell you more about your second half of this year than anything else you do this week.

If what you find raises more questions than answers, then that is where you start for more clarity.

Here’s to your success!