Learning how to set financial goals for your business will help you identify where you can grow and will improve your business strategy. Start planning for your company’s future.
Every business is different, so it’s a good idea to identify financial goals to guide your company to success. First, you will need to learn how to set financial goals, as this will help guide you with actually deciding what kind of goals you want to make.
What is a financial goal?
A goal is a desired outcome that you would like to achieve. A business financial goal is a target your business is aiming for. Often in relation to gaining more revenue or growth in your business.
This is a result you would like to see in an area of your business, perhaps it’s greater lead generation, greater sales, or higher profit margins, the goals will vary depending on what you’d like to achieve.
You should note that you should also consider creating business goals that are not directly related to your businesses’ finances. Your general goals should include the purpose of your business and its values, it’s shouldn’t just be about money.
Why you should set business financial goals
Setting financial goals for the business is a great way for you and your team to be aware of your company’s progress and your goals can tell you how to get the most out of the effort you are putting into your business.
There is no point putting all your time into one area of the business and not seeing results, instead, you should take the time to decide on your business goals and deciding who, how, and when you will achieve them.
Setting goals will also drive focus and maintain the pursuit of growth. Goals can help keep the entire team or just you as an individual business owner, on track on the way towards success.
Methods to set financial goals for your business
Your goals need to be the right size, the smaller and more attainable the better. There’s nothing more un-motivating than a daunting and out-of-reach financial goal. We suggest that you use the SMART method to set financial goals for your business.
SMART goals
Specific - begin with a small goal that is clear, concise, and doable.
Measurable - decide on how you will measure the success of the goal.
Attainable - is this goal reachable?
Relevant - what will this goal do for your business?
Time-based - establish a reasonable time frame.
Using the SMART goal method can help you reach your financial goals, by breaking it down into these components, you can really begin to understand how this goal will help your business.
Specific
Make your financial goals as specific as possible. Try not to limit your company’s realistic abilities but it’s better to be specific than broad. A specific financial goal will be more attainable because you will be able to identify specific actions that will help you achieve it.
Measurable
You need to be able to measure your progress and evaluate how you are working towards this goal. If you are interested in expanding your client outreach and gaining more clients, this will be measured by how many clients you are gaining per month for example.
You will be able to take a look at your methodology and understand what you’re doing right or wrong to increase the number of clients you’re bringing on.
Attainable
Your goals need to be in reach. Whether it is a short-term, mid-term or long-term goal, if it is realistic, it will keep you and your team motivated.
Having a large overwhelming and unrealistic financial goal can be discouraging because it is such a big task. We believe in small hurdles, set attainable financial goals that you can accomplish.
Relevant
This part of the goal-setting method should be sort of obvious. Is your goal relevant to the growth of your business? The purpose of setting financial goals is to help your business, so if your goals aren’t related it won’t be helpful. Align your goals with the current conditions of your business.
Time-based
Set deadlines and time frames for your financial goals by making an estimation of when you believe these goals will be achieved or break it down into smaller steps. This will help keep your business organized and driven as you begin ticking off your goals.
Examples of financial goals for your business
1. Decrease overheads/expenses
A mid-term to long-term goal would be to decrease your company’s expenses. This will look different for every individual business, but you should ideally go through all your expenses in great detail. Identify what expenses aren’t necessary and begin eliminating them.
2. Increase profit margins
Set a goal to make your profit margins as high as possible. You can come up with specific goals that will enable you to increase profit margins.
3. Forecast cash flows
Cash flow accounting refers to your company’s ability to retain enough capital to cover your basic business expenses. You can set a goal to monitor your cash inflows and outflows so you can be prepared financially by forecasting a drop in capital.
4. Improve productivity
For some, making their business more efficient will be a goal. Decreasing downtime can, in turn, cut down costs and increase your profit margin. You can improve productivity by getting the most out of your resources or you can improve productivity by getting rid of some resources.
5. Make investments
Investment plans should be a part of your SMART business goals. These goals will be long-term and will generate more money to invest back into your business.
You may not think that you need to know how to set financial goals for your business, but long-term it will help you track growth and identify areas of weakness. Using the SMART goal outline can help you easily break down each of your goals and share them with your team members.
.jpeg)
.jpeg)