We are now at the midpoint of the content journey that began with post 1 and, for many South African businesses, at or near the midpoint of the financial year. This is the right moment for a structured mid-year review.
A mid-year financial review is not just a performance check. It can be used as a recalibration: an honest assessment of where the business is relative to where you planned to be, what has changed in the environment since you set your annual targets and what adjustments are needed in your strategy, your budget and your 90-day plan for the second half of the year.
It is not too late to turn this year around or continue on a path to a great year.
In this post I want to give you six specific questions to work through with your management accounts and your adviser. Set aside 60 to 90 minutes for this exercise. It is one of the most valuable investments of management time you can make at any point in the year.
Why the mid-year review matters more than most business owners realise
Most South African SME owners do some version of annual planning at the start of their financial year. Not many do a structured mid-year review. The result is that the plan set in February is still normally in effect in August, even though the business environment, the client mix, the cost structure and the competitive landscape may have changed materially in the intervening months. It has not changed or been updated.
It has become a plan that stopped being useful the moment circumstances changed. The mid-year review is the mechanism that keeps your annual plan connected to your current reality. It is not an admission that the original plan was wrong. It is an acknowledgment that plans are made with incomplete information and that the job of a business owner is to update the plan as information improves.
A plan that is never reviewed is not a plan. It is a document. The mid-year review is what converts a planning document into a living management tool that actually guides decisions in the second half of the year.
The six questions to ask
Work through each of these six questions using your year-to-date management accounts from Xero. Each question maps to a specific part of your financial reports.
| Why it matters now | Focus area | Why it matters now |
| 1 | Are you on track to meet your annual revenue target? | Divide your year-to-date revenue by the number of months elapsed. Multiply by 12. Is that annual run rate at, above or below your target? If you are below, by how much and is the shortfall recoverable in the second half with your current pipeline? Was it expected? |
| 2 | Is your gross margin or key indicator where it was budgeted? | Compare your actual year-to-date gross margin percentage (key indicator) to your budgeted target. If it is below budget, identify which service lines or clients are the cause. An indicator that has drifted in the first half will not self-correct in the second half without deliberate action. |
| 3 | Is your cash position where you expected it to be? | Compare your current cash balance to your opening balance at the start of the year and to your budgeted mid-year cash position. If cash is lower than expected despite reasonable profitability, the cause is in your working capital: slow debtors, high creditor payments or costs running ahead of plan. IF it better than you budgeted, keep doing what you were doing!! |
| 4 | Which goals from your first-half 90-day plans were achieved? | Review your first two 90-day plans for the year. Which strategic priorities were completed? Which were not? For those not completed, is there a structural reason (wrong goal, resource constraint) or an execution reason (insufficient focus, competing demands)? The answer determines whether to carry the goal forward or replace it. |
| 5 | What has changed in your cost environment? | Load shedding (alternative power) costs, fuel increases, supplier price rises and wage inflation all affect your cost base in ways the original budget may not have fully anticipated. Are your operating costs in line with your budget? If not, which lines have moved materially and what can be done about them in the second half? Were these expected changes. Expected changes are good. |
| 6 | Does your second-half strategy need to change? | Given everything the review reveals, does your approach for the second half of the year need to change? This might mean adjusting a revenue target, accelerating or deferring a hiring decision, renegotiating a supplier or changing your client mix. The mid-year review is the right moment for these adjustments while there is still half a year to execute on them. |
How to run the review
The mid-year review works best when it is a structured session rather than an informal conversation. Here is how we run it.
Before the session, pull your year-to-date Profit and Loss report from Xero with a Budget vs Actual comparison. Pull your current balance sheet and your most recent aged receivables report. If you have a 13-week cash flow forecast, bring the current version.
Work through the six questions in order. For each question, write a one-paragraph answer based on what the data shows. Do not rely on memory or gut feel. The discipline of going to the numbers for each answer is what makes the review honest rather than reassuring.
Then move to the outputs section:
- What does the review tell you about the second half?
- What needs to change?
- What needs to continue or happen more often?
- What decisions need to be made?
The mid-year review is not about explaining why the first half was what it was. It is about deciding what the second half is going to be. The data from the first half informs that decision. It does not determine it.
The three outputs of a good review
A mid-year review should produce three concrete outputs before you close the session:
| Output | What it contains |
| Revised second-half forecast | Updated revenue and margin projections for months 7 to 12, incorporating what you have learned in the first half and any changes in the business environment. |
| Refreshed 90-day plan | A new 90-day plan for the next quarter with a specific financial target, three strategic priorities and scheduled review dates. Replaces or updates the plan from the previous quarter. |
| Three decisions to make within 30 days | No more than three specific decisions that need to be made in the next 30 days as a result of the review. These go on the agenda for your next management accounts conversation with your adviser. |
These three outputs become the agenda for your next management accounts review with your BCAS adviser. The review session is not complete until the decisions are identified and the next 90-day plan is written.
The mid-year review sounds like a post mortem of the previous 6 months. It should not be this. You go through everything and see what needs to change, of course. However, at least 50% of this review should be a positive outlook going forward, despite what the numbers say. For each improvement noted, make sure you find a factor that you did well and that worked. Find out why it worked and do more of it!
Ready for a structured mid-year financial review with a qualified adviser? Book a discovery call with me (Bruce). We can run this review with you at the midpoint of the financial year.
About the author
Bruce is the founder of BC Accounting Services (BCAS), a Xero Partner and Certified Adviser based in South Africa. He works with SME owners and growing businesses to build financial clarity, strategic direction and measurable performance through the PCP Method: Purpose, Clarity, Performance.
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