Updated: Dec 1, 2020
Many business are unsure where to start when working out their financial strategy, but it basically boils down to how much money do you want to make and how you will get there. A Financial Growth Strategy for a Startup Company may look very different to an established, profitable business. Your Financial Growth Strategy should be customised to what you want to achieve and where your business is currently at.
1. Set your Long Term Financial Goals
These are where you want to be financially in the future. You may set 12 month goals and 3-5 year goals.
Your 5 year goals may look like this:
· Reach an annual revenue of $5 million
· Reach an annual net profit of $500,000.
· Pay a 30% dividend on net profit by Year 5
Once you have your 5 year goal you can work backwards to where you need to be and set your 12 month goals. They could look a little something like this:
· Increase revenue by XX%
· Increase gross profit by XX%
· Increase net profit by XX%
Note: Your long term financial goals should be linked to your Strategic Business Plan. You may also include them as part of your Business Plan (Don’t have a Strategic Business Plan? You should).
2. Measure you Success and set Key Performance Indicators
It’s important that your goals are measured and tracked along the way. Your Financial KPIs should be inherently linked to your long term financial goals. If you had revenue of $100,000, and one of your goals is to increase revenue by 10% in 12 months then your KPI would be: Revenue Target of $110,000. You measure this by comparing Actual Revenue vs Targeted Revenue and track it throughout the year.
3. Set an Action Plan to Achieve your Goals and KPIs
You cannot just set and forget - to reach your goals you must put in place actions to make it happen. An Action Plan should be developed annually at the start of each year. It should document key outcomes and actions required to ensure the success and achievement of the Financial Growth Strategy.
For example, to achieve your Revenue Target KPI, one of your actions may be to create a new Sales Manager role in your business to target a key customer group. Another example may be to open an online store to complement foot traffic to your bricks and mortar shop. Whatever your financial goals are, you should implement a number of related actions to achieve it. Review your Action Plan on a quarterly basis to ensure you remain on track.
Need help to set and implement a Financial Growth Strategy? Contact us for a 30 minute free consultation.