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As we enter the second half of 2023, you must review and update your small business financial goals to set yourself up for success. Evaluating your financial goals can help you determine whether you’re on track to achieve your goals or need to change your business plan. This article will give you step-by-step instructions on how you can finish the year strong.
1. Assess your progress
First, you’ll need to evaluate your current progress for hitting the goals you set at the beginning of the year. Where do you start? Launch your accounting software or reach out to your accountant to get your balance sheet — the document that shows your assets and liabilities. The balance sheet provides essential information such as your accounts receivable and any money owed to lenders.
Along with the balance sheet, you’ll also want to look at these metrics based on your business’s performance over the past six months:
- Revenue: The total amount of money your small business earns from its goods or services sales.
- Expenditures: The costs incurred by your business to maintain its operations. Examples include rent, salaries, insurance, raw materials, utilities, and sales commissions.
- Profit margin: This is your revenue minus your expenses from the beginning of the year until now. You can calculate this as a percentage.
2. Compare data and make adjustments
Once you’ve reviewed your financials, compare this data to your original goals and determine whether or not you’re on track to achieve them. If you haven’t met your financial objectives, it’s time to re-evaluate your business plan. Consider what changes you can make to improve your revenue and decrease expenses. You may need to adjust your pricing, target a new market, or streamline your operations.
3. Set SMART goals
After you’ve assessed your progress and made any necessary changes, it’s time to set new financial goals for the second half of 2023. However, your goals should be specific, measurable, achievable, relevant, and time-bound — i.e., SMART. Here’s a rundown of how to set SMART goals:
Specific
Be specific about the numbers you want to see at the end of the year, and identify the steps you can take to make them a reality. For example, you can consider increasing your revenue or reducing expenses to save money. Additionally, remember to plan your business expenses and prioritize spending to help grow your business and maintain profits. With accounting software for small businesses, you can use a receipt and expense tracker to help you predict and manage your cash flow.
Measurable
To make it easier to achieve your goals, try breaking them down into measurable parts so you can track your progress and see what you’ve accomplished. For example, you can say, “I will increase sales by 20% by the end of 2023.” By breaking this number down to a six-month goal, you can gauge your success until the end of the year. Ultimately, you need to know if you have — or haven’t — reached your goals.
Achievable
It’s important to set realistic and attainable goals to achieve success. While you can have bigger goals, you’ll unlikely achieve them in six months. That’s why you should sort all your goals into two sections — short-term and long-term. Put the goals you want to accomplish at the end of the year in your short-term pile, and then put your loftier goals in the long-term category. Achieving your smaller, short-term goals can help give you a sense of accomplishment and build your confidence to achieve your larger future goals.
Relevant
Ensure your goals relate to your business and are relevant for a small business like yours. They should also align with your values and long-term objectives. Ultimately, you should ask yourself, “Why am I setting this goal?”. For example, suppose you highly value the community at your company. In that case, you can say, “I want our business to have a positive impact on our community and build customer loyalty, and we can do that by representing our business at charitable events throughout the rest of the year.”
Time-bound
Your goals should have a deadline. Set monthly, quarterly, or annual timeframes for your short-term goals. For your long-term goals, you can extend your deadline a bit longer — e.g., five years. Giving your goals a specific timeline provides structure and creates urgency to finish what you started.
4. Create an action plan
After you’ve set your new goals, create an action plan and outline the steps you need to take to achieve them. This can include tactics such as increasing your market budget, restructuring your pricing, revamping your customer service protocols, and investing in invoice software.
5. Analyze your data regularly
As part of your action plan, it’s important to regularly analyze data, such as sales figures, customer acquisition analytics, and market share. Also, look at your competitors and evaluate any emerging trends that may impact your business. Then, determine what you must do to stay ahead of the curve and achieve your financial objectives. This will give you insight into your tactics’ effectiveness and allow you to adjust quickly for better results. You can save time, effort, and resources by taking a data-driven approach.
Reviewing and updating your small business financial goals is critical to setting yourself up for success in the second half of 2023. By evaluating your progress, making necessary changes, and setting new goals, you can ensure your business is on track to achieve its financial objectives.
