Setting Financial Goals
sjsmith.com.au - blog
Setting the tone
The New Year is here and I am already running late Never mind, better late than never. This year I want to talk a little more about finance, especially business finance.
I think it’s a topic that many small business owners don’t feel completely comfortable with. Money can be a taboo subject for a lot of reasons. People rarely talk about how much they make or how much debt they have. Those subjects are considered very personal. We can chat about all sorts of intimate details of our lives but we rarely talk frankly about our finances.
In its simplest form finance is simply money in and money out but the better educated you are the better chance you have of making good financial decisions.
Before you get all fired up and set your huge financial aspirations for the year it’s important to look at where you are now. How much did you make in sales in the last year? After your costs of sales how much profit did you make? How much did you pay yourself last year? You did pay yourself last year I hope! What were your best selling products or services. Which were the most profitable?
Gathering this information can sometimes feel like a bit of a chore but it’s worth the effort to get those numbers in front of you in black and white. Once you’ve got that information you can start to think about what financial goals you want to set for the year. Try to be as specific as you can. For example, don’t say I want more sales, specify how much more. Would you like to see sales rise by 30%, 50%, maybe 100%. Before you start jotting down your first million dollars in sales, I also want you to think about how you’re going to generate that extra money. Will you sell more of an existing product or service? How? Are you planning on offering new products or services? How many units of each one do you need to sell to make your target? Once you’ve set your goals and decided where the income generation will come from you now need to map out your plans with deadlines to achieve them. For example, you’ve decided your going to offer a new product at $100 each in the next three months and you want to sell 90 unit’s by the end of the year. That’s going to add $9,000 to your annual sales. So you need to have the product ready for release in three months. Write the product plan and launch within that time frame. What marketing strategy will you use to get those units sold. You need to sell 10 a month for the last 9 months of the year. How will you track your sales? You need to be thinking about these stages for every product or service you’re planning to sell.
You also want to think about goals for debt minimisation and paying off loans, comparison shopping for better rates for accounts, credit facilities and loans. Schedule in a supplier review to check you’re getting the best deal on your raw materials and services.
Also don’t forget to think about and, plan for, a price increase and a wage rise at least once during the year. Setting the financial goals with timelines for your business at the outset forms the framework for what you need to get done in your business for the next twelve months. It’s worth investing the time.
Till next time,