When you start a business, it’s easy to think of all the things you can spend money on. Fancy marketing campaigns. A bigger office space. An assistant to help with the day-to-day tasks so you have more time for strategy and growth. And looking for the best business plan writing services to create an impressive business plan for you.
However, if you don’t focus on growing the value of your company and planning for how much it’ll be worth in a year or five years, at some point that dream will collapse under the weight of its ambition. Because there won’t be enough money in the bank to support it.
So if you want to take your business to the next level of success, you need to set specific financial goals. This blog post will show you how to create financial goals for your startup that are both strategic and achievable. And also specific enough so that you can keep track of them!
What Are Financial Goals?
Financial goals are the targets you set for your business that are financial in nature. Financial goals can include things like revenue, profit, cash flow, and market share. The most important thing about a financial goal is that it’s measurable and attainable.
It’s one of the most important elements of planning for a business, as it helps to define where you want your company to go, and how much progress you need to make to get there.
Why Setting Financial Goals For Your Business Is Important?
Financial goals are important because they help you to stay focused on your business goals. They can also help you determine how much money you need to make and how to make it. But that’s not the only reason why you need to take help from the best business plan writing services to set financial goals for your business. Some of the other reasons include:
- Setting financial goals is a good way to measure your success.
- Financial goals can help you set priorities and focus on the right things.
- Financial goals can help you reach your business and personal life goals, as well as save money in the process.
- Finally, financial goals are important because they help you plan for the future of your business and keep yourself motivated by knowing what is ahead of you.
How To Set Financial Goals?
For setting realistic financial goals, you need to follow some steps.
Define Your Desired Results
The first step to setting financial goals is to understand what a goal is. A goal is defined as “the desired result” and it should be specific, measurable, and time-bound. This means that you need to know exactly how much money you want to make at the end of a certain period.
For example: If your goal is to make $100,000 per month, then this goal would be considered a “financial objective” rather than a true financial goal because there are no specifics or deadlines in place.
Financial goals should also be specific to your business model and industry since every type of business has different metrics they need to hit.
Evaluate Your Current Situation
It’s important to understand your current financial situation before planning for the future. To do this, it’s helpful to define your current financial goals, resources, needs, and obligations. Write down a list of all your assets and liabilities as well.
You should also consider how you want to manage these things in the future. Will you hire an accountant or do it yourself? Do you have a budget or not? These decisions will impact your ability to achieve those goals later on. So keep them aligned with what matters most.
Set SMART Financial Goals
SMART is an acronym for specific, measurable, attainable, relevant, and time-bound. If you want to achieve success, make sure your financial goals are SMART. Here’s what each letter means:
- Specific: Your goal should be written in as much detail as possible so that it’s easy to know whether you have achieved it.
- Measurable: You should be able to measure your progress on the way to achieving your goal at least once a month. It could be anything from “revenue growth” to “increasing website traffic by 30% within six months.”
- Attainable: Achieving your financial goals should not require complex systems or processes outside of your capabilities. However much work has gone into them, they shouldn’t require too much effort or investment on your part either. The easier they are to achieve (and maintain), the better!
- Relevant: If a goal isn’t relevant enough to drive all parties towards achieving it over time then it may be better suited somewhere else.
- Time-Based: For timely success, your goals should be met as soon as possible. Give it a deadline, whether it’s a month, a quarter, or a year.
As long as your financial goals include these five SMART criteria, they will guide you on how much effort and energy need put into achieving them. It’s better to take help from the best business plan writing services if it’s difficult for you to execute these SMART criteria in your financial plan.
Break Your Goals Into Milestones
Break your one big goal into several milestones to make things earlier to achieve. Milestones are the stepping stones to achieving your final financial goal. They are shorter in duration than your overall business plan and can often be achieved within one year or less.
You should define three or four milestones around which you’ll organize your business financial plan, with each milestone corresponding to a key milestone in the development of your product or service.
Make sure these milestones are measurable and easy to track. They should also be achievable and realistic, with an end date that doesn’t require unreasonable amounts of time or money (e.g., “get paid for this project by December 31st”).
Create A Plan To Achieve Your Goals
Now that you have goals and milestones, it’s time to make a plan. You can use a spreadsheet or word processing software to write out your plan. Or you can take help from the best business plan writing services to make a plan for you. But whatever method you choose would ideally include the following steps:
● Make A List Of Milestones
Define milestones to set on how much progress each month will take. How many customers do you need to acquire per week? How many new clients do you need this month? What sales goal is reasonable for the next quarter?
List these milestones in order of priority and assign them numbers from 1 (the most important) through 5 (the least important).
● Create Benchmarks For Each Milestone
Create benchmarks for each milestone so that there are no surprises later on when things don’t go according to plan. For example, you have a milestone to acquire 100 new clients per month. To achieve that, set benchmarks such as at least 25% of those being repeat business from existing customers, at least 30% coming from referrals, and at least 20% being new leads generated by marketing efforts each week/month/quarter, etc.
● Make An Accountability System
Create an accountability system with friends and family who will hold you accountable when you do not follow through with your plans. This will help prevent procrastination. This will also help you to not only know what needs to be done but also show up every day ready, willing (and excited!) to do it. Otherwise, things won’t get done at all.
Figure Out What You Have And What You Need
Setting financial goals for your business is an effective way to grow and become financially successful. But you also need to figure out how much money you have and how much you still need to save. For that:
- Calculate the total amount of money that you need to save to achieve your goals. This is called the “goal amount” or “target sum”.
- Determine what percentage of your goal amount each milestone represents (i.e., if your goal is $100K and there are four milestones along the way, then each milestone represents 25% of this).
- Set aside an appropriate amount of cash flow per month toward these milestones until they’re achieved (i.e., if it takes two years to reach one milestone, then allocate $4K per month across those two years until it’s reached).
Endnote
As a small business owner, making plans is important so that you can reach the goals that are important to you. Financial goals can help you plan your business, grow your business, and make sure that you are on track to be successful.
It’s not enough just to have a great idea and be able to execute it. Without carefully planning out your finances, you may find yourself running into problems down the road.
Once you have your financial goals in place and know what needs to happen for them to become a reality, you can make a plan to achieve success in less time. Make sure to get professional due diligence services as well, so you’ll be ready for any unexpected scenario.
