When it comes to having a business, setting short, mid and long-term financial goals is something that a lot of business owners have incorporated into their overall plan of action when talking about finances.
Preparing for the unexpected events that business life brings before anything even happens is always the best way to go about it. It is better to be safe than sorry, especially if you don’t pay any attention to what goes on in the world or your industry.
Card debt (specifically credit card debt) is not a burden that any soul wants to have to take on during running a business, so this is why in this blog we will talk about setting short term financial goals, what they actually are and how you can effectively run your business from a financial standpoint. Read along if you’re interested in learning more!
What are Short-Term Financial Goals?
Short-term financial goals are the act of planning out your immediate expenses and money you will also be making in a short period of time. Taking small financial steps can give you a massive confidence boost when they can lead to success in the long run if done correctly.
Although straight away you may not notice the benefit of paying attention to all the small details (expenditure and revenue), this is more for the long run and to save, invest and make you money over time.
Annual financial planning gives you the chance to review, analyse and tweak your spending strategy whilst also looking at areas where you can make more money too. An emergency fund will always be there for you if something seriously goes wrong. But, to put funds into that emergency fund – it is best to create these goals to see how much you can afford to put in every month.
So, what are some short-term financial goals? Well, if you’ve never set any financial goals before, then here are some of the steps that we recommend you should be taking to formulate the best process to achieve financial goals within your business and or retirement.
Creating an Emergency Fund
As we previously mentioned, an emergency fund is known as money you set aside as a business to pay for anything that could go wrong with expenses (usually to pay immediately). Well “how much money should we put into it?” you may ask. At first, a realistic goal is to put at least £500-£1000 into your emergency fund – then gradually increase this overtime every month.
A great way to devote some money to your emergency fund is to sell any unwanted items you have at your household through eBay, Craigslist, etc to give your funds an extra boost as it will give you a foundation, to begin with!
Another tip to help you start saving money in the long hall if anything goes wrong is to dedicate a certain amount of money each month to put into your emergency fund. We recommend opening up a separate savings account and setting up a standing order of how much you can afford to put in each month. Doing this every month will ensure that you will reach your short-term financial goals and then once the number is hit – you won’t have to stress about anything if the business decides to lose its mojo for some time.
Establishing Your Budget
It can be almost unbelievable how much money can be slipping through the cracks each month without you knowing anything about it until you start financial planning. Until you fully understand and know how much money comes in and out of your business each month, you’ll never know where you’re truly up to.
This is why tracking and establishing how much you will make and spend each month and being placed in an orderly fashion, will benefit a business inevitably. A great way to do this is to find a certified financial planner template on the internet which will combine all of your expenditures and revenue from your accounts into one place so you can label each expense and revenue by what category it was from. This way you can quickly use free online calculators to add up ins and outs and make budgeting simple!
For example, if as a business you are spending £100 a week going out for a meal as a team, equating to £400 every month – but you don’t think of that as expenditure, then you may find that you’re spending too much money on the enjoyment side of things. Not to say you can’t go for a meal with the team, because that is very important beyond any money. However, maybe going for one meal a month instead will save you £300 and feel like more of a luxury. This way, you have found a way to save £3600 a year just by cutting down on some original spending.
Paying Off Credit Cards
This can be a controversial topic within the business industry as some businesses believe that paying their credit cards off is essential. Whereas, other companies think that it isn’t necessary to pay off your credit card debt.
However, we’re going to break down both of the options and see which one will suit you. Firstly, we’ll go through the positive impact of paying your credit cards off. Many business experts say that because of the skyrocketing interest rates of credit cards, it makes it hard to achieve and set financial goals.
On the other hand, other business gurus say that you should create an emergency fund because if an unexpected crisis occurs and you don’t have emergency funds – then this will send you even further into credit card debt.
As a business owner, it is up to you to decide which option works for you best in this situation as there are so many different factors for businesses in separate niches. You may have a loan or loans you have to repay that will cost more than other businesses. Or you might have other insurance policies you fit into. Therefore, the decision is yours when moving forward with your short-term financial goals!
Mark is a multi-award winner in business networking and relationship building. He is passionate about coaching and mentoring business owners and professionals through 1-1 & group coaching, team performance workshops and group mastermind sessions.