How to Set Financial Goals for a Small Business
A goal is a dream with a deadline, Napoleon Hill once said. Every small business owner started with an idea. With your idea, comes with it a purpose or a goal. A goal is a very broad topic. We can have career/professional goals, travel goals, and so on, and for the benefit of this blog, we will focus on the ‘financial goal’ for a small business owner.
A financial goal is any plan whether you want to achieve something monetarily or manage your cash on hand. Examples of financial goals are: paying off debt and starting up a business.
Setting financial goals is inherent if you are a business owner. You can jot down maybe hundreds of them! Acting upon your goal is an important step to reaching it, but if you set your goals “incorrectly”, you may be doomed from the start. And when I say ‘incorrectly’, I mean you haven’t defined all of the parameters to your goal. So how to set goals “correctly”?
As a smart small business owner, your financial goal should be SMART!
Your goal must be detailed and exact. You can quickly sum them up in a sentence.
What exactly do you want to do? Is it clearly written without any doubt?
Example: I will pay off my debt with creditor A worth $50,000.00 in 10 months.
Includes criteria for measuring progress.
How will you track your progress? How will you know when you’ve met your goal?
Example: I will make monthly payments of $5,000.00 for 10 months.
Your financial goal needs to be a realistic one. It is not completely out of reach, or too easy for you.
Is this realistic for you? Do you have all the resources needed to achieve the goal?
Example: I can achieve this if I cancel my cable service and delay the purchase of a new vehicle.
Your financial goal must be worthwhile. It is something that is actually important to you right now and one of your current focus areas.
Why are you doing this? Is it going to significantly make a difference to your business?
Example: I need to pay off this debt to lessen the payables of my business.
Your financial goal should be accomplished in a set time frame, such as 2 weeks or maybe in 1 year.
When will you have this completed? Does your goal state a clear and specific completion date?
Example: I will pay off my debt in 10 months.
The above SMART way to set a goal can be used by anybody with a different goal category. But as a small business owner, always do remember that you shouldn’t just stop setting your financial goals and leave them waiting to accomplish it alone. You have to do all the work and with a financial goal, this will help you assess where you are now, how you are going to do to meet your goal, check if it is realistic enough and must be worth your time and effort, and should make a difference in your life once achieved.
To set your own financial goal, check the accompanying worksheet and use it as a guide in preparing yours. Let this be a step to fulfill your desire as a small business owner and set new goals once achieved.
If you’re ready to start crushing your financial goals, make sure to check our Finance Savvy CEO community!