A new financial year is a great time to review the financial goals of your business. Financial goals help guide decision-making, measure progress and ensure business sustainability. Are you a business owner keen to take more control over your business’ trajectory? Or perhaps you’re a commercial finance broker eager to explore ways to better guide your clients. Now is a great time to reassess and implement new business goals.
In this article, we explore how to establish financial goals for businesses, the steps to achieving them, and where businesses can go for help.
Assessing your business’ finances
Financial goals are essential for all businesses, and while a new financial year is a great time to reassess your goals, Octet Chief Financial Officer Campbell McCallum says regular assessment throughout the year is key.
“Regular or periodic financial reviews allow business owners or executives to assess performance, understand financial health, and identify and react to potential issues and opportunities early.”
Campbell says assessing your finances doesn’t have to be onerous, especially if actioned regularly. “You’ve got to pick the form it takes and how often you do it, but that will be driven by the nature of your business and what you’re trying to achieve.”
Types of financial goals for a business
So, what are some examples of financial goals for businesses?
Examples of short-term financial goals:
- Managing cash flow: Positive cash flow is critical for all businesses. Monitor income and expenses to maintain control of cash flow. Make adjustments or access business finance when needed.
- Reducing expenses: Regular financial assessment will reveal areas where costs can be cut without compromising quality, such as renegotiating supplier contract terms or finding more cost-effective service providers.
- Increasing revenue: Implement strategies to boost income, such as launching a targeted marketing campaign or introducing new products and acquisition channels.
Examples of long-term financial goals:
- Expanding the business: Plan for growth by setting goals to open new locations, increase production capacity or scale operations digitally.
- Entering new markets: Research new local and global markets, or diversify your customer base and revenue streams vertically or horizontally.
- Investing in new equipment: Allocate funds for upgrading technology or purchasing new equipment to improve efficiency and productivity.
- Improving profitability: Focus on strategies that will enhance business profitability over the long term, such as adjusting pricing, reducing costs and increasing operational efficiencies.
Steps to setting financial goals
Campbell says business owners should consider four simple questions when setting financial goals: “Where is the business currently? Where do we want to go? How will we get there? How do we track our progress?”
Step 1: Assessing your current financial situation
“The first step is conducting a financial health check.” At this stage, you should dive into the business’ financial statements to uncover cash flow trends, develop an understanding of profits and identify expense patterns.
Step 2: Defining specific and measurable goals
Campbell says using a simple framework like SMART helps set better goals. SMART stands for:
- Specific: Goals should be well-defined and precise.
- Measurable: They should include criteria to track progress and measure success.
- Achievable: They should be realistic, considering available resources and constraints.
- Relevant: Goals should align with broader business objectives.
- Time-bound: They should have a clear deadline or timeframe.
Step 3: Developing a plan to achieve your goals
Next, it’s time to create actionable steps by allocating resources, setting budgets and assigning key tasks throughout the business.
“Once you’ve set your goals, it’s important to consider how you’ll get there,” says Campbell. “You’ll need to set the benchmarks and milestones that you’re going to measure against and have a comprehensive plan in place to help you achieve that.”
Step 4: Monitoring progress and making adjustments
Regularly adjust business goals based on performance and market changes.
“You ultimately return to where you started, with a financial review,” says Campbell. This might be a quick check-in once a month or something more rigorous on a quarterly basis. Again, the form and frequency really depends on your business and objectives.”
For steps on conducting a comprehensive health check of your operations, explore our business health check guide.
How experts can help
Campbell says professional advisors such as commercial finance brokers and accountants can offer expertise in a range of areas to support goal setting. “Your broker or accountant can guide you through the initial stages of financial planning. They can assist with structuring your financial strategy and providing valuable insights.
“There are also other subject matter experts who can assess the feasibility of your financial goals. Industry experts have a detailed understanding of market conditions and can provide insights based on certain themes and projections.”
And then there is Octet. “As a funding provider, we can help businesses throughout the process by providing tailored working capital solutions, including Debtor Finance and Trade Finance. Working capital finance allows businesses to maintain liquidity, manage cash flow and achieve their goals in a timely fashion.
“A great example is when a business experiences peaks and troughs in cash flow. Working capital finance can help smooth out cash flow fluctuations due to seasonal sales and other factors. Intelligently applied, finance can also help to free up existing business funds to drive growth or take advantage of opportunities.”
Achieve your financial goals with Octet
If the start of a new financial year has inspired you to set new goals for your business, or you’re a broker looking to better support your business clients, our working capital specialists can help.
Octet offers innovative financial solutions to fit businesses in various industries, including labour hire, manufacturing and healthcare.
Get in touch today to discover more.
Disclaimer: The following comments are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.