The first part of the year has been difficult for most businesses. In response to these hard economic conditions company owners were forced to cut expenses and in many cases lay off staff.  In the last few months there have been subtle signs that the economy is recovering and business is starting to pick up—may I repeat subtle. For companies with longer sales cycles it may be some time before they experience an increase in business.

Given the half-year mark, company owners need to accurately forecast the remaining months to determine their financial position at the end of the year. Credit lines and bank loans are reassessed based on year end financials. The income statement for the year prior will determine the availability of credit to run operations as the economy improves in 2010. For some companies, a positive net income (or only a small loss) will be a necessity to gain access to funding, which is used to purchase inventories or hire employees to take advantage of future opportunities.

As I review my clients financials. I am creating a year-end forecast by assessing submitted client proposals and the salespersons pipeline. I am actively speaking to each salesperson to get realistic numbers on what “they strongly believe” will close this year. I preface my discussion with the fact that financial decisions will be made from their anecdotal information. In this, I wish to discourage over optimism from a believe they are being judged for performance. And then, of course I am discounting their answers to stay on the conservative side.

From there I juxtapose the sales forecast with our current run rate (monthly overhead) and add it to the existing income statement to predict the year-ends income statement. This final number tells me whether it is time to cut more, aggressively ramp-up sales or a little bit of both.

We are over the half-way mark, for companies with a longer sales cycle this may be the last chance to adjust sales and/or expenses. Don’t sit idle and hope things will just work out. Instead gather the information, begin the discussions and break out the calculator. The numbers may not be pretty but as I tell my clients, I have never seen anything good, ever come out of ignoring reality and now that we know, we can at least do something about it.