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Set some SMART financial goals for your business
How to achieve your financial goals this year
There’s nothing like starting the year with a few solid goals.
It’s a New Year, and a new opportunity to inject new energy and enthusiasm into your business by setting some financial goals. It’s easy to dash off a few ideas on the back of an envelope, but we want you take the idea of goal setting a little more seriously.
We suggest you spend some quality time creating achievable goals that tie in with the overall strategy of your business.
Business goal setting doesn’t need to be complicated, but commitment and focus are required to set the kind of goals that will fire up your team and make a real difference to your results.
Setting financial goals? Make sure they’re SMART
SMART goals are :
S – specific,
M – measurable
A – attainable, achievable
R – realistic
T – time-based, timely,
For example, rather than, a goal to simply increase sales, a SMART goal might be to increase sales by 10% by 31 April.
For example, rather than, a goal to simply increase sales, a SMART goal might be to increase sales by 10% by 31 April.
Before you do anything else, review and update your business plan
Already got one? Excellent. But business plans are not meant to be set and forget. To keep your business on track use the SMART goals from your business plan to set a 90-day action plan focusing on specific goals.
If you don’t have a business plan, I would encourage you to look at completing a One-Page Business Plan. The One-Page Business Plan focuses on the “who, what, where, how and why”:
- Why are you in business? (Purpose/Goal)
- Where to you want to be? (3-5 years time)
- What do you need to do? (Critical numbers/KPI)
- How do you do it? (Action Plan)
- Who is accountable?
At Modoras we can assist you in preparing a One-Page Business Plan. We have an on-demand webinar that explores this topic in much more detail.
Get a handle on your cash flow
The MYOB blog “The Pulse” warns that 60% of businesses that go bust are still profitable, but ran out of cash1. Make control of your cash flow one of your 2021 financial goals.
Set up some SMART goals around regular, timely invoicing, setting and enforcing clear payment terms and rewarding an active collections department. Together, these measures will all contribute to strong cash inflow.
You can also review expenses and cut back on non-essential costs, be active in asking for discounts from suppliers and for deposits on larger jobs.
And finally, review your customers for profitability and cull those who are costing you money. If you feel you don’t have time to watch your cash flow, you should delegate this critical task.
At the very least, consider training a dedicated employee to keep an eye on daily cash ins and outs and to make sure there is sufficient cash for upcoming transactions (and warn you if there isn’t).
Make it your business to understand financial reports.
Learn how to read and interpret financial reports
Every business owner should be willing to learn how to read and understand financial reports and concepts.
It’s easy to outsource functions like accounting and payroll, but as your business grows, there’s an expectation that you understand your finances enough to make crucial decisions on how you’re running the business.
Create some goals around your financial education, attend a course on interpreting financial statements. Learn to read a profit and loss statement, a balance sheet and a cash flow document. Get a grip on basic financial ratios.
To stay in control of your thriving business, you’ll need to improve your financial knowledge in line with business growth, or risk becoming poorly informed and vulnerable to poor financial decisions.
Financial goals: it’s time for action
For business owners in early 2021, it’s time to make some promises to yourself and your business. Here’s what we think you should prioritize:
- Make sure you review your business plan at least annually.
- Use SMART goals wherever possible, for accountability and realistic targets.
- Develop a 90-day action plan in relation to your business goals.
- If you can control your business cash flow, you are well on the way to business success.
Don’t leave finance to the accounting department. Learn some financial skills and you’ll find yourself driving and directing your business with increased knowledge and confidence.
Don’t forget, a business advisor can be a valuable resource when you’re setting goals and making plans for the new year. Call Modoras on 1300 888 803.
“To stay in control of your thriving business, you’ll need to improve your financial knowledge in line with business growth.”
Over to you
Have you set your goals for this year? Are you a systematic goal setter or a back of the envelope style? Let us know what you think of this article.
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IMPORTANT INFORMATION: This blog has been prepared by Modoras Accounting (QLD) Pty. Ltd. ABN 81 601 145 215. The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals’ personal circumstances have been taken into consideration for the preparation of this material. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Accounting (QLD) Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Accounting (QLD) Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Accounting (QLD) Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Accounting (QLD) Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication. Liability limited by a scheme approved under Professional Standards Legislation.
