Financial Goals
Financial goals and objective setting can be challenging, especially if you don’t consider numbers to be your strong suit. Surprisingly the basis of financial goal setting, particularly in small business, has little to do with numbers and much more to do with your personal goals. The first question is to review why you chose to start your business in the first place. Was it a lifestyle choice to increase your flexibility, or did you want to be your own boss, choose your hours and increase your income in the process? What if the original plan was to turn an idea into a start-up, grow it into a thriving business before selling it and moving on and yet five years later you are still slugging away? This is the perfect example of why financial goals are not always number driven and should be articulated and regularly reviewed, in case you’ve lost your way or changed course. “If what you are doing is not moving you towards your goals, then it’s moving you away from your goals.” – Brian Tracy Besides the why, the most fundamental financial goal starts with profitability, obviously. No one goes into business without an expectation that...
Read MoreHow To Prepare Your Budget
The budget is important because it provides a framework that allows you to measure the financial performance of the business. This will make it easier to make decisions about the management and direction of the business. Even though this may be an obvious point, a lot of small business owners do not prepare a budget or, if they do, often fail to monitor the actual performance against the budget on a regular basis. As a result, incorrect or poor decisions may be made that can impact on the viability of the business. It is also important to understand the difference between a budget and cash flow. In brief, a budget will record the expenditure when you receive the account and record the income when the invoice is sent out whereas a cash flow will record the payment when it comes out of your bank account or when the income is deposited into your bank account. When preparing a budget there are some key steps to follow and some of these have been summarised below. Review the strategic or business plan for the previous 12 months and use this to identify key objectives for the next 12 months. For each...
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