The Mid-Year Check: 3 Numbers That Tell You How Your Year Is Really Going
A mid-year financial review takes about 30 minutes and comes down to three numbers: your profit so far this year, your invoices older than 30 days, and your cash runway. Together they tell you where your business actually stands at the halfway mark, which the bank balance never will.
The problem with checking your bank balance
Most owners check one number, and it’s the wrong one.
The bank balance feels like the truth because it’s the easiest thing to look at. But it’s a snapshot of one moment, not a picture of your business. It’s high the week a big client pays and low the week payroll clears, and neither of those tells you whether you’re actually making money.
The bank balance shows you a moment. These three numbers show you the year
Number 1: Your profit so far this year
Not revenue. Profit.
Revenue is what came in. Profit is what stayed after everything it cost you to earn it. Plenty of businesses grow revenue for a year and end up with less money than they started with, because costs grew faster and nobody was watching the gap.
Pull your profit and loss statement for January through June. Look at the bottom line, then compare it to something. Your plan for the year, if you have one. Last year’s first half, if you don’t. Direction matters more than decimals here. Is the gap between what you earn and what you keep getting wider or narrower?
If you can’t answer that within about ten percent, that’s worth knowing too. It usually means the books aren’t being read, only filed.
Number 2: Invoices older than 30 days
This one is money you already earned and haven’t been paid for.
Run your accounts receivable aging report. It groups what clients owe you by how long it’s been outstanding: current, over 30 days, over 60, over 90.
Everything past 30 days deserves attention. That’s your cash, sitting in someone else’s account, funding their business instead of yours. And the older an invoice gets, the less likely it is to ever be paid. The list also tells you something about your process: if the same clients appear every month, the problem isn’t them, it’s that nothing happens automatically when an invoice goes late.
Number 3: Your cash runway
If income stopped today, how many months could you keep operating?
Take the cash you have available and divide it by your average monthly expenses. That’s your runway, in months.
This is the number owners most avoid, and the one that matters most under pressure. A Federal Reserve survey found that 44% of small businesses had a cash flow problem last year serious enough that they couldn’t pay their bills on time. Almost half. Knowing your runway is how you see that coming with time to act, instead of discovering it the week payroll is due.
What to do with what you find
Thirty minutes, three numbers. That’s the whole exercise, and doing it in July still leaves you six months to change the outcome.
If the numbers look good, you’ve confirmed it with evidence instead of hoping. If they don’t, you’ve found it in July instead of December, which is the entire point.
And if the exercise is hard because the reports don’t exist or don’t look right, that’s its own answer. Books that can’t tell you these three things aren’t doing their job. Sometimes that means catching up the monthly bookkeeping. More often it means fixing the processes behind the numbers, so the reports stay reliable on their own.
Do this every quarter, not once a year
Owners who check these three numbers quarterly are rarely surprised by their own business. That’s not because they’re better at finance. It’s because they look often enough that problems show up small.
We help service businesses, contractors, and self-employed owners across Concord, Walnut Creek, Oakland, Berkeley, Richmond, and the greater East Bay read their numbers and act on them, in English y en español.
Book a free 30-minute Fit-Check Call and we’ll walk through your three numbers together.
