Starting the new year with solid financial goals is key to creating and maintaining growth within your organization. However, it's not enough to write down your top revenue and growth goals and call it a day. In order to achieve the greatest success when pushing towards your new year's goals, you'll need to take the time to set well-thought-out and actionable goals.
Follow the steps below to help guide your financial goal-setting sessions as we enter the new year.
Evaluate your current year's financial goals
Look back on your goals for the past year. Did you achieve them? Where did you fall short? The first step in setting new goals is to have a firm understanding of your current financial situation.
Once you understand this, you can begin to build out your goals for the new year.
Consider reviewing some of the following metrics:
Understand your revenue concentration: Get a clear view of each client's ROI and how much revenue they bring in for your organization. You can view this as a percentage of your total revenue.
Review net profit margin: Dive into the profitability of your organization to see where there may be opportunities for changes in the new year.
Evaluate sales growth rate: By keeping your eye on this metric, you'll be able to identify what elements of your strategy positively impact sales, and which are hindering them.
Take note of accounts receivables turnover: Understanding this metric will allow you to see how well your clients pay their invoices in the allotted time. Be sure to note any clients that are consistently paying late.
Sort your goals
Once you've evaluated where your organization landed in the previous year, you'll want to start sorting your new year's goals into short vs. long-term goals.
Your short-term goals will likely generate more quick wins and be easier to achieve, whereas others will require more time and need to be broken down into smaller steps to stay on track and hit them. By sorting your goals, you'll be able to prioritize your tasks and see what action you need to take now and in the near future to ensure your giving your organization the best chance for success.
Break down goals
Once you've understood the general timelines for your financial goals, break each one down into measurable sections to make it easier to achieve. This is especially important if you're working toward a significant goal as it will likely take longer to accomplish than other, smaller goals.
Ensure your goals are realistic
It's important to consider that while on paper, your goals may look achievable and present few roadblocks, there will always be external factors that may arise over the next year. What are some potential roadblocks you may face?
Consider the following
• Inflation: Are costs predicted to rise? If so, how will this affect your current goals?
• Product/service pricing: Do you need to raise your prices based on the current economic landscape?
• Cost increases – Review upcoming cost increases for the new year: raw materials, wage increases, and other operating expenses
• Supply chain: Can you continue to get the needed supplies in the quantities you'll need?
Make your goals SMART
SMART goals will focus your team members on the most critical objectives for your business. Ensuring each goal you set is a SMART goal will give your organization the best chance to achieve its strategic objectives efficiently.
Using the SMART acronym means that each goal you set will be:
Setting firm, well-thought-out, and strategic goals for the new year will allow your organization to enter the year with clearly outlined priorities and tasks, helping set a strong foundation for your company to hit the ground running and avoid any delays in implementing your growth strategies.
At The Finance Group, our dedicated and experienced team partners with organizations across North America to support their growth and provide strategic advice and financial assistance to help businesses generate the results they desire. Connect with us today!
