Many business owners start their businesses because they have expertise in a particular area. While focusing on creating your product or service is important, you are also in business to make money.
Setting financial goals to drive your business forward is of utmost importance for small businesses. You should always know where your money is going and what it’s doing.
Goals should be specific enough whereby a business owner can determine if the goals outlined were achieved
Financial goals for a small business can be as simple as making money by year 2 of business or more complex such as achieving double-digit profit margins
Bottom line is to take time to develop realistic financial goals and monitor them constantly to determine if you are achieving them
Financial Goals to Drive your Business Forward
1. Create a Budget
Create a budget to help inform decisions timely and accurately
A budget will inform you on whether you can afford to expand or purchase that equipment you have been eyeing
A budget will inform you if you can hire additional staff
You can compare your actual results to your budget to review your performance and spot any red flags that you should focus on
2. Revenue Growth
This is a goal that is pretty much in every business owners’ mind
Increasing traffic, whether it is to your social media platform or a local store translates into revenue growth
Have a strategy for your marketing to acquire additional customers or clients. This could be trying a new marketing tactic that you haven’t tried previously
Work on your personal brand. Are you standing out in the crowd? A good personal brand can drive up revenue growth as you make more connections
Think about incentives or promotions to boost sales
3. Expense Efficiency
Cost Efficiency is crucial to small business success
The difference between making profits vs losses comes down to cost efficiencies
Be specific on how you will reduce business costs. Will you use more technology to automate, or reduce debt in order to save more
Do not ignore the small costs. They add up to large costs. A lunch here, purchasing a coffee maker – all add up
Make sure you are negotiating with your vendors in order to take advantage of the lowest cost available
4. Cash Flow Management
Cash is the lifeline of your business
Managing your cash flow is of utmost importance
Creating a cash flow statement to monitor fluctuations is a helpful resource
Cash flow management will help inform decisions on your working capital. Do you need to collect your accounts receivable faster? Or pay your Accounts Payable slower?
Setting aside an emergency cash reserve that you can use during a downturn. A good rule of thumb is 3-6 months worth of expenses
Schedule time to review your cash flow and adjust your cash flow statement accordingly
