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

Given the half-year mark, company owners need to accuratelyforecast the remaining months to determine their financial position at the endof the year. Credit lines and bank loans are reassessed based on year endfinancials. The income statement for the year prior will determine the availabilityof credit to run operations as the economy improves in 2012. For some companies,a positive net income (or only a small loss) will be a necessity to gain accessto funding, which is used to purchase inventories or hire employees to takeadvantage of future opportunities.

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

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

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