5 Tips for Setting Financial Goals for Your Business

5 Steps to Setting Successful Financial Goals

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1). Know your business cash flow

Run monthly?cash flow statements?and rolling?cash forecasts:

• prepare for seasonal influxes of cash?
• get accurate financials to really understand your free cash flow

Any predictable income is vital to plan ahead for cash crunches and to strategize how you will achieve your financial goal.

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2). Have a back-up plan

Every?budget?should include a cash cushion. Maybe you will have an unexpectedly large tax bill or an operational emergency. What would you do if your landlord suddenly sold your space? Is your?business prepared for a recession?

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Tip:?Remember to note any previous expenses that had large?variances.

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3). Arm yourself with a team of experts

Save yourself the time (time = money, remember?), and look to?hire a CFO?or?outsource your accounting.

If you're not an accountant, why take up ample amounts of your time trying to right the?balance sheet?and rework statements?

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4). Set one financial goal each fiscal year

Having sales targets is great, but crafting one definitive goal for each year will set yourself up for an ambitious year. Every year.

For example:

• Maybe it's time to increase your?safety net?we mentioned above. (Cough, cough, "economists pencil in a recession..." cough.)
• Or maybe this is the year you pay off your?business loan?completely– or a portion of it.
• Redefine your investment objectives. Remember when Amazon had unimpressive profits but was reinvesting a TON in growth and acquisitions? And has now?reported net income over $10 billion since 2019?

That said, the goals don't have to be huge. They just need to exist.

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5). Build a culture of growth

Loop your team in on the financial goals each year. Better yet, include them in the planning by providing them with a road map and updating them quarterly. Your staff will be more likely to buy into your vision, which creates a common purpose and?growth culture.

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Tip:?If you offer incentives, remember to connect them directly to your fiscal objectives.?

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Whatever you and your accounting team determine to be your financial goals for the year, remember that keeping overhead low is just one small part of helping your business scale.

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