Accounting
9 min read

How to Set Financial Goals for Your Business: A Step-by-Step Guide

By Haley Davidson

Founder & Content Strategist, Haley Davidson, LLC

Setting business financial goals helps you zoom out from your company’s day-to-day operations. When you have specific goals in mind, you can make smarter decisions 🎯 and get crystal clear on what steps you need to take to grow your business. But how do you actually, practically do this?

Setting financial goals can be intimidating, whether you’ve been in business for years or just a few months. You need to get a clear picture of your current finances 🖼, while also taking time to dream about your future. 💭 

At Relay, our mission is to help you understand exactly what you’re earning, spending, and saving — because if you don’t know your numbers, it can seem impossible to achieve your goals. The truth is, the number one reason that small businesses fail is that they simply run out of money, so in this article, we’ll take you through the steps of setting clear goals and avoiding common cash flow pitfalls. 

In this article: 

What is a business financial goal? 

Business financial goals are specific objectives related to your company’s revenue, savings, profit margin, and other key metrics. They can be long-term or short-term, but at minimum, small business owners should prioritize goal-setting on an annual basis. 

Why financial goals matter for your business

Running a business without financial goals is like driving a car without a destination in mind. If you don’t have a plan, you can easily run out of gas ⛽️ — AKA, cash. 

But what if you create a business budget every month? Budgets help you understand where your money is going and how much you need for each month. It’s a great start and goes a long way — but budgets aren’t always enough on their own to put you on the path to success. 💫 

For example, if you don’t have a savings goal, you might bring in just enough revenue to pay your bills. That could put you in a tricky situation if one of your clients is late with a payment and you don’t have enough money to cover those expenses.

By contrast, financial planning helps you look at the bigger picture. You can allocate part of your budget to a savings goal, and over time, those savings will allow you to reinvest into the business or pay for your expenses in an emergency. 🚨

Financial objectives can also give you and your team more motivation. When you know what you want to achieve, you’ll be more likely to come up with creative ideas for accomplishing your goals. 

Examples of business financial goals 

No matter where you’re at in your business, most entrepreneurs want to make more money. 💸 But to make a real change, you’ll need to get more specific. Below, we’ve outlined some examples of business financial goals that will help you get focused and decide what’s most important for you and your company right now

💵 Improve cash flow 

Knowing how to manage cash flow is essential for any healthy business — but 82% of failed businesses say cash flow problems were a factor in their failure. 🤒 

That’s why one of the best financial goals for a business is improving cash flow. This can be done through a variety of strategies such as shortening your payment terms (for example, from 30 days to 7 days) or negotiating payment due dates with your vendors. The method you use will be determined by where you’re starting from and your ultimate goal — more on that later. 

Tip: Relay can help you stay on top of your cash flow with a multiple bank account budgeting strategy.

🛟 Increase savings 

Some businesses overlook savings. But just like you need a personal emergency fund, so does your business. Cash flow problems happen to everyone, even if you’ve perfected the process. Having 3-6 months of operating expenses on hand will save you a lot of stress. 😎

You may want to set up dedicated reserve accounts for different purposes, like taxes, emergencies, and future investments into your business. With Relay, you can open up to 20 checking accounts (for free!) so that you can easily manage your goals. 

Once you have a target 🎯 in mind, you can also use Relay to set automatic recurring transfers — that way, you can watch your savings grow over time, without lifting a finger. 😌 

🤑 Boost revenue 

Increasing your total revenue for the year, quarter, or even week is always a good idea — and it doesn’t have to be a complicated or drawn-out process, either.  

Consider smaller goals like experimenting with your pricing 👩‍🔬or widening the top of your marketing funnel with social media. The most important thing is to have a specific number in mind so that you can create an actionable plan. 

💰 Put profit first 

Only 40% of small businesses are profitable. 🤯 Unfortunately, when business owners get bogged down by daily operations, they lose focus on this incredibly important metric. 

Profit is what allows you to reinvest in and grow your business. 📈 Your profit margin also demonstrates your company’s value and overall health. Without a clear profit goal in mind, it’s easy to rack up expenses without realizing the impact those costs are having on your bottom line. 😬 

When you make profit a top priority, you’ll create space for your business to grow. It’s worth considering a strategy such as Profit First, where you use five profit accounts to manage revenue, profit, owner’s pay, taxes, and operating expenses

As we mentioned above, Relay actually allows you to open up to 20 accounts so that business owners can easily manage their savings and profit in one place. Instead of having to do mental math every time you log into your bank account, Relay’s multiple accounts give you a crystal-clear 💎 picture of your business finances. 

5 steps to set financial goals for your business 

By now, you might be wondering, “This sounds great, but where do I even start?” 🤔 Well, we’re here to help with a 5-step guide to setting business financial goals that work. Let’s dive in. 

1. Get clear on your current financial situation 🏁 

If you don’t know where you’re starting from, setting goals is like throwing darts with a blindfold on. 🎯 It might not be fun to sit down and review your financial statements, but it’s an essential step to growing your business. 

You may want to start by looking at your balance sheet — AKA, the document you can get from your accountant or your bookkeeping software that shows your assets and liabilities. It will show you important information such as your accounts receivable and any money owed to lenders. 

Beyond your balance sheet, you’ll also want to review the following numbers based on your business’s performance over the past 12 months: 

  • Revenue: the amount of money that’s flowed into your business 

  • Expenditures: including labor costs, travel expenses, and owner’s pay 

  • Profit margin: your revenue minus expenses for the entire year — you may also want to calculate this as a percentage  

2. Decide where you want to go ✈️ 

Once you know what you’re working with, it’s time to dream a little. 💭 Where do you see your business in a year? What about 5 years, or 10 years from now? 

You might realize that you have some urgent short-term goals you need to address. For example, it’s hard to set a big revenue goal if you’re struggling to pay your bills each month. 

In that case, you may need to take a step back and think of how you can create a solid financial foundation right now. That way, you’ll be able to give your full attention to more exciting and ambitious goals in the future. 🤗 

After reviewing your financial standing, you might also realize you’re in a great position to make serious moves with your business. Maybe now is the time to hire an employee or test a new product. 

No matter what situation you’re in, your goals should excite you and motivate you to take strategic steps forward. ⚡️ 

3. Set SMART goals 📝

The best financial goals for your business are SMART. SMART is a goal-setting framework that stands for specific, measurable, achievable, realistic, and time-bound. So why does it matter? 

Well, it’s easy to say, “I want to make more money.” But it will be difficult (or impossible) to achieve such a vague goal. By contrast, the goal “In 2023, I want to make $20,000 more in revenue than I did last year,” is specific, measurable, and time-bound. 

A goal like this keeps you accountable to a certain time frame ⏳ and an exact amount of money. The next question is, is your goal realistic and achievable? Well, for small businesses and entrepreneurs, the answer to that question will depend on a number of factors: 

  • Past performance, including your company’s growth rate each year 

  • Industry benchmarks and statistics for businesses similar to yours 

  • Access to resources including capital, employees, and education 

  • Your individual mindset, motivation, skills, and personal goals 

To go back to our example above, an additional $20,000 in revenue seems like a reasonable goal for a small business. But what if that business had only made $20,000 in revenue last year? 

Doubling its revenue might still be possible, but the business owner will have to evaluate if that’s truly a realistic goal based on the factors above. 

All that said, realistic goals are important, but so are BHAGs — big, hairy, audacious goals. The term, coined by Jim Collins and Jerry Porras in their book Built to Last, refers to long-term goals that energize and excite you and your team. BHAGs are meant to be just challenging enough to push you out of your comfort zone and to the next level. 🚀 

One example of a BHAG would be a company’s world-changing vision, like Google’s goal to “organize the world’s information and make it universally accessible and useful.” So far, Google has accomplished that goal, so it might be worth setting a BHAG of your own. 😉

4. Create an action plan ⚡️ 

The first 3 steps outlined the best way to choose financial goals for your company. Now, you need to work backward to create a roadmap 🗺 for business success.

Take some time for yourself to think through what specific actions are needed to meet your goals. You may also want to establish smaller milestones along the way. For example, if you want to reach $100K in total revenue next year, you should figure out how much you need to bring in each quarter. 

Your breakdown might look like this:

Total annual revenue: $100,000

  • Q1: $15,000 

  • Q2: $20,000

  • Q3: $30,000

  • Q4: $35,000

Since you’ll probably gain more clients and become better at building your business over the year, it’s reasonable to assume you’d progressively increase your revenue each quarter. 

The same process would apply to a savings goal or a profit margin goal. Once you’ve broken down the objective into bite-sized pieces, you can then brainstorm specific steps to help you reach each mini-goal. Here are some questions to ask yourself: 

  • Do you need to launch a new product or offer? 

  • Do you need to raise your prices or change your pricing model completely? 

  • Do you need to evaluate the ROI on your expenses and potentially cut costs?

  • Do you need to come up with a new marketing campaign or sales strategy? 

The clarity that comes after completing this process will be invaluable. Suddenly, you’ll have a solid business plan that you can refer to each day as you make decisions. You just need to repeatedly ask yourself, “will this choice bring me closer to my goals?” 

5. Revisit your goals regularly 🤔

Now that you’ve spent all this time creating business financial goals, it might be tempting to hold on tight. But as much as we hate to say it, the next step of the goal-setting process is to evaluate them regularly — and be open to change. 🍃🍁

The world, the economy, and your industry are always in flux. If you truly want to be successful in business, that means you need to be ready to be flexible and respond to those shifts. 

It’s a good idea to at least schedule a quarterly review 📆, either with your accountant or with yourself. During that review, you can repeat step #1 of the process above (getting clear on your current situation) and see if you need to adjust your goals. 

How to stay on track with your business financial goals 

Hopefully, after completing the 5 steps above, you feel confident about your ability to achieve your goals. But as time goes by, it can be difficult to stay focused. ⏰ 

Let’s say you want to save for an emergency fund or prepare for an upcoming expense. It’s tough to stay on track with those goals if you have all your cash 💰sitting in one or two accounts. 

That’s why Relay offers business owners so many features to manage their finances. From multiple checking accounts to automatic transfers, and bill pay automation, we want to help you stay on the money. 💸

Using these features, you can do things like automatically transfer a percentage of your deposits to your taxes account, your emergency fund account, and any other accounts you’ve opened for your goals. 

We know achieving your business's financial goals can be tough. Putting those goals on autopilot is one of the best ways to stay on the path to success. 😎

Here are a few more quick tips for achieving your business financial goals: 

  • Use a digital envelope system ✉️ to stay on budget each month

  • Share your goals with your team, family, and friends 📣 

  • Schedule a meeting with your money weekly 📆 to review your numbers

  • Celebrate the small wins to keep your motivation up 🎉 

  • Attach your financial goals to a bigger purpose or personal “why” 🤗 

You’ve got this 👏 

Business financial goals don’t have to be overwhelming. Using the 5-step process in this guide, you can get clear on what you want to achieve 🔮 and find the motivation to take your business to the next level. 🚀

And if you’re looking for an online banking solution that will help you stay on budget and put your financial goals on autopilot, check out Relay — you can sign up here in just 10 minutes!