Setting & Tracking Financial Goals For Small Business Success – Part 1

7 Differences Between Book Keeping And Accounting 1

PART 1.

Setting financial goals for your business may be one of your most important responsibilities as a leader and business owner. Your financial goals serve as far more than wishful projections, they form the backbone of your road map for success, internal and external. Financial goals are something that every single business should possess regardless of its market, model or size. Let’s explore how you can set and track financial goals that empower your business to thrive and encourage your team to join you on the journey.

Why financial goals matter for your business

Financial goals are more than just numbers on a spreadsheet or notepad. They are the roadmap that helps you plan and make strategic decisions. Without clear goals, it’s like driving without a destination in mind. Think about it—how do you know if you’ve arrived if you never set out where you wanted to go?

First, financial goals offer clarity. They transform your vision into actionable targets. When you know exactly what you want to achieve, it becomes easier to lay out the steps necessary to get there. Just like plotting the course on a map or via a GPS; you need a specific endpoint to calculate the best route.

Second, having financial goals motivates you and your team. A shared goal brings people together, fostering collaboration and boosting morale. Your business benefits from the focus and drive that comes with working towards a common objective.

Lastly, financial goals prepare you for the unexpected. By regularly tracking your finances, you can identify trends and anticipate potential pitfalls before they become crises.

The benefits of financial goal setting

Setting financial goals is a powerful tool for all business owners, offering a host of benefits. Not only do they provide direction, but they also enable you to measure success and maintain focus.  Let’s have a look in a bit more detail at these benefits:

Clarity and focus

Financial goals bring clarity and focus to your business operations. With well-defined objectives, you can concentrate your efforts on activities that align with your overarching strategy. This clarity makes decision-making easier and more efficient, reducing the clutter of distractions and a peg in the sand that you can keep referring back to.

Motivation and accountability

Goals serve as a source of motivation and accountability. Having clear targets keeps you and your team motivated to achieve them. It also creates a sense of accountability, as everyone understands their role in reaching the collective goals. Give these goals additional power by sharing with your team when we achieve X we will be able to do Y.

Risk Management

Financial goals help in identifying and managing risks. By setting tangible targets, you are better prepared to anticipate potential challenges. This foresight allows you to develop contingency plans and make informed decisions, reducing the impact of unforeseen events. It’s the business equivalent of having a backup generator ready to kick in during a power outage.

Getting started with financial goals

Setting financial goals may seem daunting, but it’s easier than you think. Start by assessing your current financial position. Understanding where your business stands financially is the first step to setting realistic and achievable goals and comparing this to where you would like to be.

Assess your current financial situation

Before setting goals, take a deep dive into your financial records. Look at your income, expenses, cash flow, and debts. This comprehensive overview will give you a clear picture of your financial health and highlight areas that need improvement.  Remember that to do this, you must have up to date and accurate bookkeeping records ideally using an accounting software package.

Define clear and specific objectives

Once you have a grasp of your current situation, it’s time to define your financial goals. Ensure they are specific, measurable, achievable, relevant, and time-bound (SMART). Instead of setting a vague goal like “increase profits,” aim for something concrete such as “a targeted net profit of at least 15%.” 

Align goals with your business strategy

Your financial goals should align with your overall business strategy. Consider your company’s mission, values, and long-term vision. Who is your Ideal Customer and are you servicing them currently?  Ensure that your financial objectives support and contribute to these larger goals. For instance, if expanding into new markets is part of your strategy, set financial targets that reflect this growth ambition as incremental goals on your current markets.

If you have any questions regarding your business or bookkeeping,
please feel free to reach out to our team. 

We wish you a safe, happy and productive month ahead!

All the best,

The BookSitters Team