Your finances are one of the most important elements of your small business. If finances are not handled well as a top priority then you will see negative results either immediately, or as time passes. On the other hand, quality management of your finances can help you make the best decisions for your business, and even help you see ways that you can increase profits. One way you can manage your business’s finances well is to set strategic accounting goals.
If you have a small business located in or near Cincinnati, consider hiring Orcutt & Co. to handle your accounting tasks so that you can focus on setting and achieving your financial goals. We can handle your daily accounting and bookkeeping tasks, as well as payroll and tax prep.
How to Set Strategic Accounting Goals
Below, we’ll explain how you can set strategic accounting goals for your small business.
Determine Your Small Business’s Financial Needs
Before setting goals, you need to first understand what your business’s needs are. This will give you an accurate framework for setting specific and measurable accounting goals. In order to determine your small business’s financial needs, you can look at the accounting records from previous years and transactions. Reviewing this data will help you discover areas where your business needs more funds to be allocated, areas where it’s spending more than it should be, or areas that have been overlooked.
Use this information and do some math to determine exactly what your business needs financially and what needs to change. This is how you will discover the types of accounting goals you should set.
Set a Realistic Budget
Using the knowledge you gained from looking at your business’s accounting records, you can then set a budget. Setting a budget can and should be one of your strategic goals. In order to set a budget goal, you should make sure that the budget you choose is realistic and achievable. A goal is not strategic if it is not possible for your business to reach it.
Your budget should also be measurable so that you can check your business’s progress and make adjustments as necessary. This type of goal will require you to review your business’s cash flow with diligence.
Explore Ways You Can Cut Costs
Now that you have set a realistic goal for your business’s budget, you can then look at cost cutting goals. This will help your business save money and simultaneously stay within your budget. Find those expenses that can be either done away with, reduced, or substituted with more cost effective options.
Setting cost cutting goals should also be realistic and measurable. You don’t want to cut so many costs that your business is no longer able to function due to a lack of materials or equipment. Be sure that you review your financial records carefully so that you can cut costs in the right areas.
Keep Track of Your Spending and Earnings
Along with creating a budget and goals for cutting costs, you need to keep track of your cash flow. This will help you know where your business’s money is going at all times. Good cash flow management will provide the data you need to measure your progress in reaching the goals you set. It will also show you if your goals are working out well or if they need to be adjusted according to your business’s financial needs.
When you figure out where your money is going, you can begin to look for alternatives ways that you can cut costs. Matching expenses with income generates your profitability report which can help improve margins and increase your bottom line.
Implement Your Strategic Accounting Goals
Once you have set your accounting goals, then they must be implemented. Get your employees involved by informing them about the goals you’ve set for the business and explore ways to make reaching the goals fun. Showing your employees how they have an impact on these goals and the business overall will provide intrinsic rewards for the part they play in achieving the goals.
Be sure to set a timeline for the implementation of your goals. This will help you measure your success accurately and also gives motivation to achieve the goals within your desired- and realistic- timeframe.
Evaluate Your Progress
As your timeline progresses, you need to check the progress of your goals according to the measurements you set in place for them. Since these are financial goals, most of the metrics for measuring will come from the accounting records. Always keep your records up to date so you are able to get an accurate measurement of your progress.
If sufficient time has passed for you to have reached your accounting goals, and you have not done so, now would be the point in time to make some changes. You may need to change the way they are implemented or provide more motivation to achieve the goals. If you learn that the goals are not realistic, then your goals need to be adjusted.
When you have reached your accounting goals, your accounting records should look better than ever and your business will be further rewarded through the increased profitability the goals provided.
As a small business owner, if you ignore your financials, you’re putting your business at risk. In order to ensure long-term success, you need to set strategic accounting goals that will ensure your business’s financial needs will be met.
If you have a small business located in Cincinnati, contact Orcutt & Co. to handle all of your accounting needs so that you can accurately measure your financial goals. We handle your day-to-day bookkeeping and accounting tasks, as well as assist with tax prep and payroll.