Setting Financial Business Goals for Your Business to Help Support Your Personal Ones
Small business owners never really get a break from thinking about money. Between monitoring the business’s financial health and their own finances, a business owner is often stretched thin trying to keep a lot of balls in the air.
Maybe profits are up, but your investment portfolio is struggling—or your personal accounts are thriving just as an unexpected tax bill wreaks havoc on your business’s budget. It’s impossible to achieve financial stability and peace of mind when your professional and personal finances are out of balance.
Small business owners can’t set financial goals in a vacuum. The decisions you make for your business will often affect the decisions you make in your personal life, and vice versa. Aligning your financial business goals with your personal financial goals creates balance between work and home.
Aligning Financial Business Goals and Personal Goals
For small business owners and entrepreneurs, creating and refining business goals should be an ongoing process. The business goals that made sense a few years ago (or even a few months ago!) may not support the business’s current direction. Your personal financial goals also may have changed since the last time you sat down and thought about them.
A critical part of aligning your business goals and personal goals is clarifying exactly what your personal financial goals look like. How you approach long-term planning will depend on factors like when you’d like to retire and what kind of financial support you want to provide for your family members. Once your personal financial goals are solid, it’s time to assess your business goals. These are just some of the things to think about as you set goals.
Create protections to keep your personal money out of the business. Small business owners often feel they have no choice but to dip into their own savings or use their own credit cards to float the business through lean times. While setting business goals, think about ways to protect cash flow and create financial safety nets that don’t involve tapping your personal accounts.
Focus on ways to keep costs down, not just increase revenue. Business owners generally have more control over their costs than revenue. You can’t force people to buy your services, but you can maximize your profits by keeping your own costs low. Increasing profits as a small business owner or entrepreneur may help you grow the business and/or take more money home to put toward your personal financial goals.
Set both short-term and long-term business goals.
Business owners who focus too much on short-term business goals risk being unprepared for long-term success. Of course, focusing entirely on long-term business goals isn’t a viable plan either; 10-year goals aren’t much use if the business doesn’t survive this year. Setting both long- and short-term financial business goals allows a small business owner to stay on track with both day-to-day operations and big-picture progress.
Attach specific, measurable benchmarks to business goals.
When business owners get caught up in day-to-day operations, it’s too easy to lose track of the bigger financial picture. Establishing financial benchmarks allows you to track the business’s progress and identify profit trends.
Sometimes, having measurable business goals also helps a business owner decide whether or not to keep pushing forward or cut their losses. Emotions can cloud a business owner’s judgment when their business is struggling. You don’t want to be in a position where you’re pulling money from your own accounts to try to keep the business afloat. Setting clear goals with deadlines may help take some of the emotion out of the decision.
Maybe an owner decides they’re going to sell the business unless X goal is achieved by Y date. When the deadline arrives, the business owner can use real data to make the decision about how to proceed.
Think about business goals related to health benefits and retirement planning as well as profits.
Being the boss (or at least one of the primary decision makers for your business) comes with a lot of responsibility around health insurance planning and retirement funding. If you’re covered by your own business’s plans, you have a personal stake in making sure the business provides high-quality health coverage and at least one retirement plan option. Your personal financial goals may be torpedoed by a huge hospital bill.
There are a lot of things to consider when making business goals around benefits and retirement. What does a successful health insurance plan look like for your business? If your current plan isn’t meeting employees’ needs, what changes will you need to make to improve the plan? Is the business going to make contributions to employees’ retirement plans, and if so, how much will it aim to contribute? How does the business need to budget for these expenditures?
Setting business goals is a unique process for every business owner. Sachetta Callahan always takes a whole-person approach to helping clients create business goals. We know that the personal and professional often intersect, especially for small business owners. We’re here to help business owners prepare the plans they need to create the future they envision, both at work and at home.
I’m happy to answer any questions you have about setting business goals that support your personal goals. Contact me today!
George Liakakis is a Certified Public Accountant and holds a Master’s Degree in Accounting from the University of Massachusetts Lowell. George has been working in public accounting for 7+ years with two different firms ranging in sizes from local to national. He joined our team in 2016 and will be focusing on both business and individual taxation.