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Mid-year is here: Do you know where your business plan stands?

January 07, 2013
A financial review can help you stay on track

If you're like most people, you made some resolutions back in January—like exercising or eating more vegetables—that by now could use a reboot to get you back on track.

In the same way, many business owners make plans and budgets before the new year that need to be revisited halfway through it.

As we move into summer, it is a good time to ask: Are your business results on track with your plan? Are your financial needs still covered? A mid-year checkup can help you find out. By scheduling an appointment with your banker, you also can get ideas about changes you can make to keep your business finances on target.

Guessing vs. knowing

The beginning of the year is a natural time to plan, but decisions made before January usually involve some guesswork. By July, you know how the year is turning out. Is business good enough that you need tools to help you save time? Or are you looking for ways to cut expenses instead? Either way, knowing is better than guessing.

Another advantage of a mid-year checkup is that your business and personal tax returns are available. The tax preparation process gathers a lot of useful financial information in a single place and puts those numbers in perspective relative to past years.

Digging in

A mid-year financial review should cover a lot of ground. To enjoy the benefits, you'll need to put in some effort, but your banker can help.

Financial service providers that are committed to serving small businesses have bankers who can "dig in" to your business statements and other documentation provided by you. In doing so, they'll gain a better understanding of your financial situation and can make suggestions for saving time and money.

Here are some key issues to evaluate when you sit down with your banker:

● Cash flow. If you've had to scramble to cover expenses, a line of credit could provide ready cash, so other financial priorities aren't put at risk.

● Business expenses. Take a long look at everything you purchase and how you pay for it. This leads to expense control: How can you spend less or be smarter about purchasing, and is there a credit option that makes sense based on how your business spends?

● Accounts receivable. On the revenue side, do you need to change your invoicing process to help bring money in sooner? You may want to consider offering more payment alternatives, such as signing up for merchant services, which will enable your business to accept credit and debit cards and receive customer payments more quickly.

● Planning a big purchase. If you need to make a major purchase for your business, talk with your banker about your options, including exploring financing and ways to make the most of your credit profile.

● Equipment financing. If your business depends on vehicles or equipment, it's time to see if your needs have changed during the first half of the year. Check if your bank offers credit lines that you can use as needed for equipment purchases, without reapplying later this year.

● Online tools. There's a wealth of tools for managing your business online, including online banking services that offer invoicing and bill pay. Ask your banker

what's available.

● Other opportunities. With interest rates remaining at historically low levels, it may be time to take a look at commercial real estate, new equipment or

expansion opportunities.

Be prepared

With everything you need to get done on a daily basis, you could be tempted to skip a mid-year review. But it's worth the time and can help you get organized. To make the review productive, gather the following before you meet:

Your most recent tax returns

Merchant card statements, if you have them, for the last three months Vendor lists and purchase records

Account statements from other financial institutions

Ask your banker if there are other business and personal financial statements that he or she recommends you bring to the meeting.

Whether it's your busiest time of year or your slow season when you start thinking about a summer vacation, it's time to consider a financial review. With a few mid-year course corrections, you can help make sure your business is ready to reach its goals in the second half of 2012.

Morris Jackson is a community banking district manager for Wells Fargo Bank in Henderson.

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