Three Questions Every Business Owner Should Run in June

Frank Gramlich, CPA | Xavier Financial Services

Last week, I shared what running my own mid-year numbers revealed about XFS. Revenue patterns, billing discipline, and a few conversations with clients that confirmed this is a question everyone is sitting with right now: am I actually on track?

The follow-up question is always the same: how do I find out?

A mid-year review does not need to be a production. It needs to be honest and it needs to be specific. Over the years, I have found that three questions do most of the work. Run them now, while there is still time to respond to the answers.

Question 1: Is My Revenue Where I Expected It to Be?

Start with year-to-date (YTD) revenue and put it in context. A single number doesn't tell you a whole lot. Compare it to the same period last year, to your budget or projection for the year, and to the trend line over the past several months.

When I ran this exercise on XFS, the broader picture was more useful than simply looking at a number on the P&L, such our net income. Revenue is running slightly behind budget, and comparing it to prior year YTD revealed a familiar pattern: a visible post-tax-season dip that I have seen before. A shortfall with an explanation is a different problem than a shortfall without one.

It is helpful to consider whether the trajectory reflects what you are seeing or feeling in your business, and whether anything in your results requires a response.

Key Takeaway: Comparing YTD revenue to the same period last year tells you far more than comparing it to your budget alone. Context adds value to your review.

Question 2: Is My Billing Keeping Pace with My Work?

Revenue on the P&L and cash in the bank are not the same thing, and the gap between them usually lives in the billing process.

For service businesses especially, it is easy to let invoicing slip during busy stretches. Work gets done, billing gets deferred, and suddenly you have a cash flow problem that has nothing to do with how busy you are. As I previously wrote, I'm guilty of that coming out of tax season myself! Tightening up the collections process was one of the most immediate improvements I made this spring.

Ask yourself: what has actually been invoiced versus what has been earned? How quickly are outstanding invoices getting collected? Are there clients with balances that have not been followed up on? That last question is worth answering carefully. Recall how a billing follow-up with one client turned into a broader conversation that led to a new engagement. This is an example of how billing discipline can produce results that extend well beyond it's administrative purpose.

Question 3: Are My Expenses Still Justified?

Pull up your expense report and read it the way a skeptic would.

This is something I walked through with a client recently. While reviewing their financials together, we identified an opportunity to conduct a vendor analysis on several recurring line items. Contracts renew, rates increase, and service relationships that made sense two years ago sometimes do not hold up at their current cost. Think of it like Rocket Money for your business. A mid-year review is the right moment to evaluate whether every expense is still earning its place.

You would not need to cut aggressively, but do review with intention. In some situations, the assessment might reveal the need to add expenses. For some business owners right now, the expense conversation has naturally led to a discussion about capacity and whether it is time to hire. This is a decision we're evaluating at XFS. Revenue is trending up, current capacity is stretched, and the numbers may justify bringing someone on sooner rather than later.

What the Answers Tell You Next

Once you have worked through all three questions, a few actionable topics tend to surface. If revenue is tracking meaningfully ahead of last year, it is worth revisiting your estimated tax payments. The Q2 deadline was June 15, and if your income has grown since you made that calculation, Q3 may need an adjustment. A shortfall at year-end is avoidable if you address it now.

For business owners whose revenue growth has been substantial, the three-question review sometimes leads to a structural conversation. At a certain income level, electing S-corporation status can make real sense from a tax efficiency standpoint. Mid-year is a practical time to evaluate whether that threshold has been reached.

Bring Your Answers In

Every business is different and there is no one-size-fits-all response. Discoveries made during your review are worth bringing into a planning conversation. If you have worked through these three questions and you are not sure what to do with what you found, that is exactly what Q3 planning sessions are for. If you'd like to discuss what you found, please contact XFS to schedule time before the summer runs out.

[email protected] | (561) 739-4320

Xavier Financial Services, LLC | Boynton Beach, FL | xavierfinancialservices.com