Before discussing creating Essential financial goals for business it is more important to understand what is necessary before any goal is designed. As CFO of Scholastic Inc, Maureen O’Connell writes in her blog; To create concrete financial goals, there are 3 things that one must absolutely do viz- Envision the End, Consider the Costs and most importantly be SMART.
Let’s take up an example.
In a corporate training program, managers from the different department were present. The top management of the organization was present there to understand what they are heading too. The trainer, before he started training asked them to solve a jigsaw puzzle.
He gave the managers a box with 1000 puzzle pieces in them and asked them to complete the puzzle within one hour. Who completes its first will be considered as the winner. Soon they started with solving the puzzle, but alas they found that tie was out and they are yet not able to complete the puzzle.
The trainer explained that the reason was simple. Everybody present there was an expert in their own field but they failed, why? Because they do not have any idea that what the puzzle was all about! They kept on arranging them but didn’t have any idea that what are they actually want to get!
This is same for organizations too if you do not have an idea about the essential financial goals for business you will not be able to know that what you are trying to achieve. The goals should be specific and clear so that you know that where are you heading towards in one year or five years’ time.
For starting three simple steps will be useful.
Visualize the end
Set down first that what are the essential financial goals for the business that you want to achieve in future. Do you want to achieve that in one year, 5 years or 10 years? Consider both short term and long term goals so that you can fulfill each short term goal to achieve the long term ones. In short, you must be able to envision the end.
Consider the costs
In order to meet the goals, you need resources. Consider the different resources that you will need for meeting the goals. Resources will be in terms of manpower, funds, and machinery. What will be the expenses and how can you eliminate some unwanted expenses.
You need to be SMART that is Specific, Measurable, Achievable, Realistic and Time Bound while you design the financial goals. Make such goals that are realistic and possible to achieve.
If you follow these steps you will be able to plan out positive financial goals for your business.