06 Mar Measuring Success: Are You Obtaining Your Financial Goals
Financial goals are important in business. Even if our mission is socially impactful if we don’t obtain the financial goals we might not be here tomorrow to do any more social good. Setting goals is only half the battle though. After you establish what your goals are you then you need to monitor your progress. Monitoring financial goals is about getting what you want and living the life you want. Using budgets, monitoring account balances (but not exclusively), keeping a written list and being accountable for failure to meet your goals are all important. So how do I measure my success at obtaining financial goals?
Create Budgets and Monitor Them
I use QuickBooks as my accounting software. It makes it easy to enter an income an expense budget to monitor those parts of my financial plan. I pay close attention to income trends and major expense categories such as employee expense and other high dollar items I can control to a point. I don’t stress about things like insurance increases for workers’ compensation insurance. Those things that are entirely out of my control I want to be aware of them, but then relax about. I create my budgets using last years financial reports and then add in elements related to my financial plans for the coming year. Believe it or not I do one budget late in my fiscal year for the next year and then leave it alone. Over, under or somewhere in-between my business isn’t big enough to constantly readjust my budget and bother changing it in QuickBooks.
Know Your Numbers
Do you know how much you grossed last year? Was it enough? What do you hope to gross this year? These are all basic, and should be easy to obtain, pieces of information that are essential to your business. I like to know these basics because then I can make informed decisions. If I don’t know what my allowance for advertising is for 2012 it makes it hard to put together a marketing plan. If my budget for advertising is $0 then I need to know that. Hootsuit and facebook here I come. Sorry local newspaper no print ads this year. If I have no idea what my number is and commit to things all over the place then find out I over committed after it is too late what good did that do me? Most importantly you need to know what the rules are so you can break them. Just because your budget says your media budget is zero doesn’t mean you can’t spend any money on an amazing QR code campaign you think will change your world. It just means you need to find the money someplace else or understand the return on that investment and how long that may take.
It Isn’t All Income and Expense
Financial goals aren’t all about net income. A worthy goal can be establishing a better cushion in your bank account, getting better conversions on your advertising or spending less time earning the same amount of money (=increased productivity). When these are my goals I sometimes need to think outside the box to decide how to monitor them. I always keep it simple. It is is hard I won’t do it. Time related items I can measure because I use a time tracker for customer billing. I just track all my time not just billable hours. At the end of a week or month I can look back and see how much time I spent on business related tasks. I find measurable data important because often our perception of a circumstance is skewed. It may feel like I spent 100% more time in the office this year, but really I was just being pulled in more directions. I didn’t actually spend more time. If you are looking to monitor return on investment (ROI) for you social media etc you should definitely be using Google Analytics to measure your web traffic. If you are looking to build a better cushion in the bank account well then monitor your bank account (but this is the only time that should be used as a financial success measurement tool).
If your not sure where to start there are many resources there for you. Your mentor, a mastermind group, a paid consultant or other business owners may all be able to help you sort through your goals and hold you accountable. I will be the first to admit that if nobody was going to call me on it I would blow stuff off like you wouldn’t believe.
- Accountability can start with writing it down. Be accountable to yourself that you will do this.
- Share your goals with someone who will ask how it is going. Even if you can’t afford paid help in this area find a friend who also owns a business who will have coffee once a week and ask how it is going. Mastermind groups are great for this. They can vary from local themed groups to high-end exclusive groups that charge tens of thousands a year. Mentors are amazing but can be hard to come by so using a mastermind group can be a good substitute.