The beginning of the calendar year or fiscal year is a good time to review your business’s financial performance—past and future. While lessons learned from the past year are still fresh, build them into a game plan for the new year.
Financial planning starts with a good strategy and achievable goals with measurable objectives. These are not New Year’s resolutions that are forgotten within a few weeks; they are instead plans to guide the business toward success throughout the year.
Many managers use the SMART reminder to help set goals. Let’s translate this into guidelines for your business.
Specific financial goals require being aware of your customers, capabilities, market, and competitors. This includes operational and financial targets to guide tactical planning and actions throughout the year.
Measurable goes hand in hand with specific. Goal checks aren’t something you do only at year-end. At any given time, your activities tracking and financial statements should quantify how well you’re meeting specific targets. If progress differs from your pro forma plan, it’s time to investigate and do what’s necessary to get back on track. Some small businesses benefit from a cost-effective and reliable solution for day-to-day accounting, like Five Star Accounting, to stay on top of these metrics.
Achievable means goals should be challenging, but not so difficult that your team will give up when the going gets too tough. Engage your team members in helping set realistic targets and they will build commitment.
Relevant considers what is important to your business for near-term and longer development needs. This may include investment in human resource management, new technology, expansion, competitive research, and much more.
Time-bound helps to tie your goals to financial commitments and capabilities. Product development funding and cash flow projections must be planned in concert.
These goals become the driving objectives for your business. In preparing to implement them, consider your personal core competencies and skills. Be sure you are developing capabilities in others and delegating appropriately so that you don’t carry the whole burden on your shoulders. And be sure to celebrate as you’re making progress and hitting milestones.