Molly owns Milk & Masterpieces, a company that hosts step-by-step painting classes for school age children. She launched her business three years ago and it’s been growing steadily since day one. But to be honest, she’s been a bit disappointed that it hasn’t grown more. She has high hopes and expectations — the potential in the market is huge. But she’s just not sure what to do to bridge the gap between her vision and reality when it comes to her business finances.
Upon a recommendation from a networking group in town, Molly decided to hire a Fractional CFO to overcome her financial painter’s block. It turns out, there was one big issue: Molly lacked a clear financial budget and goal that her entire company could rally behind. If the expectations she had for Milk & Masterpieces aren’t clear in her own head, how can her employees and business partners support her goals? To put it bluntly, they can’t.
As a financial painting instructor (and Fractional CFO), I’d love to help take your business from a blank canvas with some pencil sketches to a full-color financial masterpiece. Together we can put your dreams into tangible step-by-step instructions for your team to turn their daily brush strokes into a beautiful financial piece of art. Schedule a meeting with me today to learn more about what clear financial budgeting and planning can do for your business growth.
Why is setting financial goals important for business?
Setting financial goals focuses your daily activities and provides an avenue for your entire team to work together towards a shared goal.
Molly has a talent for teaching preschool children with no creative training how to paint lovely pieces of art that go beyond blobs and scribbles. The secret is to take it one small step at a time. The same is true for finances. If your company wants to hit big financial growth goals, staring at the end goal numbers can feel overwhelming and unattainable. But if you break your long term financial goals down into smaller chunks, you can begin to see how every small daily task can make a difference in achieving them. This is true for you as a business owner, but also for your employees. Sharing your goals and helping them to see how their day-to-day actions impact the bigger picture of the business gives them something to work towards, which does a lot for a human’s sense of purpose and job satisfaction.
For example, Molly would like to hit $3.5 million in sales in two years. That number has been floating around in her head for months, but she never told anyone and never thought about all of the steps it will take to get to that number. It was just a number in her head: $3.5 million. No wonder growth has been slower than she would like — no one was taking the action needed to get there because they didn’t know what to do. Setting step-by-step financial goals solves that problem.
What are the benefits of setting quarterly financial goals?
The Entrepreneurial Operating System (EOS) for Business provides entrepreneurs with an artist kit full of tools and resources to get what they want out of their business. Setting goals is one of them. The system suggests setting a long-term goal (10 years), a short-term goal (1-3 years), and quarterly goals. All of these goals roll up underneath your 10-year goal, allowing you to maintain focus and direction on a daily basis. Budgeting is a great way to implement this system with your finances.
Pro tip: I highly recommend the book Traction by Gino Wickman and his Entrepreneurial Operating System (EOS). His system is designed to strengthen your business’ people, vision, issues, data, and process. When all of these components are aligned and working well, you have traction. And that’s what you need to prepare for growth! If you’d like a referral for an EOS implementer, please send me a message.
Think about painting a beautiful landscape scene of a mountain range. You know you want to paint a mountain range, but where do you start? Breaking it into smaller chunks is the only way it’s possible. First, you have to paint the background, a solid foundation for the rest of the landscape to build upon. From there, you build it, layer by layer, and start to slowly see the beautiful mountains come into view.
The EOS process works on goals in a similar way. First, you need to know the general direction you want the company to go, long term. Then, you break it down, layer by layer, until you reach these bite-size pieces you and your team can focus on to get there.
For a financial budget, SMART goals (Specific, Measurable, Achievable, Relevant, and Time-bound) drive accountability. Remember: it’s hard to evaluate employees with a 10-year financial goal because it’s so far away. Smaller chunks make this easier.
Pro tip: EOS talks about how people tend to lose focus on big goals after about 90 days, and sometimes broader economic things pop up which need to be addressed in a much shorter time frame (COVID or tariffs, anyone?) Pull yourself out of the weeds to focus on the right thing by setting quarterly goals and doing regular check-ins to adjust as needed.
What metrics should I use to track quarterly financial goals?
Once your SMART goals are established for the quarter, how will you tell if you are (or are not) going to meet the mark, before the end of the period? This is where the measurable part of your goals come in, as it helps you know if your day-to-day activities are in sync with your goals. Key Performance Indicators (KPIs) can be used to track and measure part of a goal. Financially, these metrics often focus on revenue, profit margins, and cost.
However, I do NOT recommend using sales revenue as a measurement because it’s a lagging indicator and sits at the bottom end of the sales funnel. Instead, track leading indicators that sit at the top or middle of the sales funnel, such as the number of outbound sales calls made to existing or new customers, the number of networking events attended, or number of business cards received. It’s much easier to take action on these items. If you set a sales revenue KPI, you will have to look backwards to figure out why sales were flat. Instead, you want to look forward to what you can do to increase sales down the road. Only track things you can have a direct impact on and have the ability to change before you get to the bottom of the sales funnel.
Another way to ensure your tracked metrics are in alignment with your goals is to identify key positions that will support your goals and ensure you have the right people ready to go. Who is your “hunter” that goes out and gets leads? Who is your follow-up person? Do they need technical skills to be able to answer questions or is a general sales person sufficient to put in the time for follow up phone calls, texts, and emails to move them along the sales funnel? Having the right people in the right position (another EOS moniker), and ensuring their KPIs are future-focused and tangible, will set everyone — and your business — up for success.
Pro tip: Regularly celebrate team achievements and small goals success to boost team morale and keep everyone focused. Sure, getting a raise or promotion during your annual performance evaluation is great, but celebrating small wins on a weekly, monthly, and quarterly basis provides your people with that dopamine hit that makes them feel satisfied and deepens their sense of purpose. They are more likely to do great work for your company if they feel they are making a difference towards achieving bigger, meaningful goals.
Strengthen your financial goals with a Fractional CFO
What is the successful scene your business is trying to paint? I’d love to guide your team through the step-by-step process of painting a successful financial future of growth through budgeting and goal setting. Schedule a meeting with me today to learn how my Fractional CFO services can help your business reach your big financial goals.
