11 Reasonable Business Goals and Objectives

Establishing professional and personal business goals is a way to drive progress and development. This is a crucial step as new business owners can get mired in the day to day. Business owners do not have the extra revenue to waste on poor management and avoidable mistakes. The creation of reasonable business goals and objectives help to align all aspects of a business and stand as benchmarks of growth from one year to the next.

How Can Business Owners Begin?

Brainstorm and write down the short-term and long-term goals that can include anything from funding, income, business expansion and outreach to new customers. After that, write the ones that are priorities as S.M.A.R.T goals. They are specific and quantifiable with measurable results within a reasonable amount of time. This helps business owners know if and when each goal has been achieved.

Employees

Most organizations have to hire employees, except for solo practitioners and entrepreneurs just starting out. A clear game-plan of designated roles and responsibilities need to be written out. For current and incoming staff, businesses need:

• To identify the roles needed in the organization;
• To delegate the responsibilities fairly within an organization;
• To write out administrative procedures, such as equipment manuals and operating procedures;
• Initial training to onboard staff;
• Periodic training to add to employee development;

Organizations need to establish consistent internal processes that will enable growth and expansion. Many organization start out with few written procedures and if they are initially successful and experience growth, find that what worked for them when there were a handful of employees is not enough to handle a few hundred employees. Clearly written expectations and procedures will help onboard individuals faster and enable all to fully understand the scope of their role and responsibilities.

Marketing

Businesses need to build brand awareness and attract the interest of prospects. What creative marketing strategies will be created over the short-term to attract desired attention and gain market share? Small businesses need to develop and implement:

• A minimum of two large marketing campaigns during the first year of operation. This can include an online social media campaign and a promotional campaign.

If the business owner is also the marketer, smaller goals can include:

• Identification of the channels best suited for the business and audience;
• Allocation of time to learn about each channel and the materials that get shared, commented on or promoted (simultaneously learning about target audience behaviors and interests or concerns); and
• Consideration of the percentage of paid to earn media that will make up a part of the marketing strategy.

There is much to do besides running the daily operations within a business. However, to be successful, business owners need to understand all of the marketing options currently available to them and identify the ones are best suited for their budget and product or service. All of these goals should align with promoting objectives in the business plan.

Growth

What are the plans for the future? A long-term goals can include:

• Opening a few offices or stores; and
• Growing revenue and profits.

Such long-term objectives may be set for 5 years or more in the future of the business when monetary goals are large. Keep goals realistic and comparable to the prices of services and products sold.
What has been outlined above is not quite SMART enough. Businesses need to make goals quantifiable. An example would be to increase profit by 10% by 20xx. Take any of the overriding objectives and break them into smaller SMART goals to increase the organization’s ability to move forward.

Why Small Businesses Need a Business Valuation

Do you plan on seeking funds from investors or eventually selling your business? A business valuation comes as a handy tool for owners and stakeholders to properly evaluate their assets and set future goals for themselves and their business. An objective financial assessment makes certain that owners know the full value of the business prior to negotiations.

What is a Business Valuation?

According to Investopedia, a Business Valuation is the process involved in the determination of the economic value of a company or business. It can be used to understand the fair value of a business and a number of approaches can be used in order to arrive at an objective estimate. Business owners and key decision-makers can expect a thorough review of financial statements, comparisons to similar companies, use of business valuation models such as discounting cash flow, and the process to take around 3 weeks. A popular model, used by Warren Buffett, is the discounted cash-flow analysis, a determination of annual cash generated, projected into the future and then “discounted” by using the interest rate of the long-term Treasury bill. There are multiple ways to determine value of a business that are strictly financial.

1. Calculate assets.
This includes the items that a business owns. Take into account the value of the equipment and inventory and review the company’s balance sheets. Good bookkeeping is necessary for a proper valuation and if a company is not operating at a profit, outside parties may want to reconsider an investment or purchase.

2. Assess stream of cash.
The most basic approximation involves an organization’s revenue. The business sells x amount per year. That amount will be multiplied according to the industry standard. The business can sell for one or two times sales. Look into the typical sales multiples for the specified industry to ascertain an appropriate multiple. Remember that revenue does not automatically equate to profit.

3. Consider multiples of earnings.
Earnings are a company’s profit and can be used to develop organizations or offer dividends. Multiples of earning are useful but may not be stable over time. Earnings are not easy to project accurately over time with less foreseeable factors such as competition and vendor price changes.

Why Should Small Businesses Complete a Business Valuation?

 

Small business owners have a considerate amount of their own money tied into their business and may lack additional investments to provide for retirement. Their business is seen as a major nest egg and needs proper quantification.

1. Sale Value
A small business owner or a serial entrepreneur may have an end goal of eventually selling the business at a certain time. Even an unofficial evaluation on an annual basis can keep expenditures in line and ascertain if the organization is continuing to run at a profit. Business valuations can keep businesses on target and be used to determine the best exit strategy for owners.

2. Partner Ownership
The status of ownership may change, with individuals that may want to buy into an existing organization. Changing the status of the organization needs sound calculations of business value. Mergers and acquisitions also require a valuation.

3. Divorce & Bankruptcy
Businesses are assets that may or not be protected in the case of a divorce or bankruptcy. A business valuation makes for a fair and equitable distribution of assets or creates a preliminary figure for a buy-out.

4. Estate Planning
Every individual needs to complete a fair assessment of all assets and create a feasible plan for retirement. A business valuation makes it easier for individuals and loved ones to ascertain business value and receive a fair amount if circumstances dictate a sudden change of plans.

Be in the know. Julie Gordon White, principal at BlueKey Business Brokerage Mergers & Acquisitions shared, “many business owners have absolutely no idea—or the wrong idea—about what their company is worth.” (See full article here) Small business owners can use business valuations to determine future profit and growth. Your business is a culmination of all of your hard work. Shouldn’t you be compensated properly for the organization and all that has gone into it?

5 Common Small Business Accounting Mistakes to Avoid

It is the small choices that can make a profound impact on your business. Poor oversight and inconsistent practices can cause business owners a big headache down the road. No one wants an IRS penalty or an audit and it makes sense for small business to have the right processes and people in place to handle their accounting needs. If you are a small business handling your own accounting needs, with minimal outsourcing, this message is for you. Avoid these practices to ensure the success and growth of your small business as it develops.

Be Aware of Common Small Business Mistakes

 

It is easy to get wrapped up in the daily management of your business and pick the most budget-friendly option to address your accounting needs. However, small business owners are not necessarily accountants and may not have put a process in place that enables their long-term financial stability. An accounting mistake can be fatal to your business. These suggestions will help you prevent a costly accounting mistakes.

1. Hire the best accountant for the job.

Dedicate the resources done to ensure that the job is done properly the first time. A common mistake is that small businesses under-invest in accounting, especially when it comes to hires. An expanding business needs more than their original junior finance person and that step up accords that new hire a jump in salary. Instead of attracting the senior controller that they may need with a competitive salary, they go with a cheaper option with less experience in their role. This choice can undermine the growth of an organization. Hire individuals with a thorough understanding of all of the key metrics that you will need for those critical business decisions.

2. Select professionals and avoid employing family.

If running a business is not stressful enough, add in family friction and problems addressing accountability when employing family members. When mistakes are made, it is easy to address them with an individual that is not part of the family. You have more options as an owner for redress and need not fear creating a problem within the family because you have fired your uncle. Your uncle or wife might seem a perfect and cheap accounting solution. This often occur for those just starting a new business with smaller budgets and receiving offers of help from friends and family. Keeping business relationships and family relationships separate help maintain the health of both.

3. Tech is not always the answer.

New accounting software is only as good as the end user’s current needs. An enterprise-level accounting system may not be necessary for small business needs and would be a superfluous expenditure for their bottom line. Businesses need to do their homework and find accounting tools designed for a business of their size. Such tools can focus on most meaningful areas for a small business, such as cash flow, compliance and invoicing.

4. Keep business and personal finances separate.

It becomes easy to pull out a business credit card and spend money on personal items when out and about. However, is the accountant supposed to review each single purchase and tediously separate them? Was the creamer for the office or the home? Will you even remember what is for home or business in a month or a year? Adding in personal expenses that cannot be written off with those business expenses can pose a red flag for the IRS. Establish a personal checking account and a business checking out in order to minimize the stress. When the IRS sees an inordinate amount of personal expenses come tax time, they will use that amount and apply that to the whole period being audited. Their computation on expected taxes will be based on this new amount. Small businesses can find themselves in a financial hole very quickly.

5. Focus on the best use of your time.

Accounting is a necessary but tedious part of your business. When your business demands it, hire the qualified staff you need to take over this end of the operations. It’s practical to strategically use your time on revenue-producing areas and allow others to handle the accounting.

Create in-house processes and hire individuals that can enable and not impede your business growth. Future success starts from the measures taken at day one.

Why to Set and Stick to Your Business Financial Goals

Every business needs a roadmap. The majority of successful businesses establish business financial goals and arrange their strategy to achieve them. Some businesses get started with little strategy and hope to stay above water, not realizing that a commitment to establishing and following through on stated business financial goals have long-term benefits. Understand the importance of business goals for your organization and what goals can be important to implement.

Why Are Business Financial Goals Necessary?

Your business seems to be running smoothly. Why add “business goals”? Why now? Three reasons below should make you rethink your strategy.

1. Continual Improvement.

Your business cannot afford to rest in this higher competitive environment. Setting goals allows organizations to identify their benchmarks of success and review how they stand against them from year one through to year five and beyond.

2. Better Decision-Making Ability.

Eyes need to stay on the ball and with defined goals, individuals throughout the organization get a clear picture of how decisions relate to the strategic goals. This understanding furthers the importance of key decisions and pushes people to make the most effective use of their allocated resources.

3. Alignment of Your Team.

Teams that understand the end goal are more effective at achieving the objective. Everyone can understand the importance of their contribution and how it impacts the organization’s success. It alos stands to offer rationale for hiring decisions, acquisitions, sales programs and financially-driven moves from the organization. There is less perceived bias and more objectivity attributed to decisions that align with clearly stated goals.

What Financial Goals Are Best for Small Businesses?

Small businesses work with less resources than the big boys and must be able to sustain themselves and earn a profit. Make sure that goals developed are SMART, or specific, measurable, attainable, relevant and time-based. In that vein, consider these fundamentals.

1. Earn a Profit.

This is the most basic goal of any enterprise. Run the calculations of revenue versus operating expenses and see if your organization’s profitability is enough to sustain stakeholders or owners and allow the organization to grow. Business revenue includes income from sales and rent on business property. Operating expenses are items such as payroll, materials, rent, advertising, licenses and taxes.

2. Determine Cash Flow Needs.

Cash flow involves your organizations ability to have enough operating capital to take care of basic expenses. Seasonal fluctuations and payment lags can interfere with a consistent cash flow and business often turn to a line of credit to make up for the gap. Organizations can establish cash flow goals to create limits for off-season operations financing and time frames for paying outstanding bills. This will enable business to reduce their dependence on credit and avoid ill-timed purchases.

3. Set a Profit Margin Financial Goal.

The percentage of total revenue in excess of operating expenses is your profit margin. Profit margin standards vary from one industry to the next. A restaurant’s profit margin may be between 2 to 5 percent. Look at your industry’s average profit margin and compare it to that of your business.

4. Plan for Future Growth or an Exit Strategy.

How will your organization use its revenue to take advantage of opportunities? Some plan to own property and organizations currently renting a space may have the opportunity to purchase in the future. Over the long haul, it may be a golden opportunity. Decisions on down payment and ROI should be considered when taking on more responsibilities or opening other offices. For other organizations, such as those of serial entrepreneurs, eventually selling their product or company at some time down the line for a considerable profit is their end goal. Establish a feasible financial goal to enable your next strategic move.

“You have to know what you’re going for, and do it with your eyes wide open,” said Francisco Dao, founder and president of The Killer Pitch, and former Inc. business coach and columnist. “Look at yourself in the mirror and ask yourself what it’s going to take to achieve your goals.” This examination is necessary to identify what you want to achieve within your business. Each of your goals will be broken into smaller steps as part of your action plan. Goals won’t ensure success but every great leader had a plan. Abraham Lincoln said, “If I had eight hours to chop down a tree, I’d spend six hours sharpening my ax. Do your homework and make the most of each strike.