Choosing the Right Financial Goals for a Business
Do you ever feel like your business isn’t reaching its full potential? Setting the right financial goals for a business is an important step to steering your business toward success.
In fact, simply the act of visualizing and writing down goals increases your chances of making them happen. But there’s more to it than that.
In this article, we’ll guide you through a series of questions and examples to help you choose the right financial goals for your business.
Reflection Questions for Business Goals
A bit of reflection goes a long way toward ensuring you’re working towards goals that fit your current needs and future aspirations. Set aside some time to consider the following questions:
What does financial success look like for me/my business?
This helps define "success" beyond just numbers
Ensure your goals align with your personal and professional vision and values
Are my goals specific enough?
Do they follow the SMART criteria?
Ensure your goals are Specific, Measurable, Achievable, Relevant, and Time-bound
Are the goals achievable with my current resources and capabilities?
A realistic assessment helps you plan and not be overwhelmed
You can still achieve a goal that is outside of your current resources and capabilities - you may just need to bring on more support such as new staff or advisors, or get more training
Consider if you’re willing to take on debt to achieve these goals. This requires reflection on your risk tolerance level
What steps and actions do I need to take to achieve these goals?
Break down your goals into actionable steps
Example Financial Goals for a Business
Here are some examples of financial goals for a business. Notice they are relevant across many industries, and follow the SMART criteria.
Revenue & Sales:
Increase monthly sales by 5% within the next quarter by implementing a targeted social media advertising campaign.
Close 3 new high-value clients in the next 6 months, resulting in a 15% increase in annual revenue.
Profitability & Expenses:
Reduce monthly operating expenses by 5% within 3 months by renegotiating vendor contracts and eliminating unnecessary subscriptions.
Increase net profit margin by 15% within the next fiscal year.
Financial Management & Security:
Set aside 10% of monthly profits for a business emergency fund and reach a target amount within 1 year.
Invest 15% of surplus cash in a diversified portfolio of low-risk assets (e.g., bonds, index funds) within the next 6 months.
Debt & Cash Flow:
Pay off your highest-interest outstanding business loan within the next year by increasing monthly payments by at least 10%.
Increase the down payments required for products/services by 10% to improve cash flow by the end of the next quarter.
Process-Driven Financial Goals for a Business
While the above goals have specific numerical targets, such as increasing sales by a certain percentage, financial goals for a business can include improving and implementing systems and processes. These goals not only save time and resources but can also lead to significant strategic financial benefits.
Here are some examples of process-driven goals that can improve your business's financial health:
Conduct a Quarterly Review of key performance indicators (e.g., revenue, expenses, debt-to-equity ratio) to identify areas for improvement.
Improve Cash Flow by implementing a system to collect outstanding receivables within 30 days of the invoice date by Q3.
Invest in Accounting Software and support to automate tax, accounting, and payroll by the end of Q2.
Improve Sales Order Accuracy by reducing order fulfillment errors by 25% within the next 6 months by implementing a double-checking process before order confirmation.
Implement a System for Tracking Inventory waste and aim to decrease it by 10% within the next 6 months.
Prioritizing and Balancing Goals
Having a variety of financial goals is great, but it's important to acknowledge that you can't focus on all of them at once. Take the time to decide how you will:
Prioritize Goals: This might involve prioritizing based on urgency (goals critical for immediate survival vs. long-term growth goals) or alignment with your overall vision (e.g., focusing on increasing revenue if expansion is a priority).
Balance Competing Goals: Sometimes goals can seem to contradict each other. For example, reducing expenses might conflict with a goal to increase marketing spending to drive sales. Consider strategies for achieving a balance, such as finding cost-effective marketing channels or streamlining operations to free up resources for both goals.
Stage Your Goals: Break down your goals into phases. You might need to achieve certain milestones before tackling others. For instance, building a customer base might be a prerequisite for focusing on high-value clients.
Non-Financial Business Goals
While this article focuses on choosing financial goals for a business, remember that non-financial goals are still important. A similar reflection and prioritization exercise can be completed for non-financial goals such as:
Increase customer satisfaction by 20% (as measured by surveys or Net Promoter Score).
Improve employee retention by 50% through professional development opportunities and a positive work environment.
Increase diversity and inclusion within the workforce to foster a more representative team.
Implement sustainable practices throughout the business operations (e.g., reducing waste or energy consumption by 25%).
Achieve industry recognition by winning at least 3 awards.
Meeting Your Goals With a Team
Setting clear financial goals for a business takes some time and energy, but the rewards are well worth the effort. Our team excels in supporting businesses to define and meet their financial goals. Book a free strategy call with the Accounting Made Accessible team to discuss your business goals and explore how we can help you turn your vision into reality.