As we bid farewell to 2020, now is the time to give your business some extra attention and look onward to 2021 and all that can be achieved. A new year is a chance to set new business goals and take a step back to look at the direction of your business. As you analyze your year-end financial review, are you contemplating how you can strategize for growth and improve operations?
If so, you should start planning for the new year by reevaluating your business strategy and analyzing where you need to inject cash flow to increase revenue and achieve new goals. If you never assess your operations and continue to set the same goals year after year, you may never see your full potential or truly grow as a business.
Jump-starting your operational goals begins with financial planning and cash flow. Sufficient cash flow can help improve your business strategy and be the gateway to achieving your goals. As you set new year’s resolutions or a five-year plan to improve your business, prepare for 2021 by setting specific goals, calculating financial projections, and arranging finances.
Start with Goals
Preparing for new beginnings that result in increased business starts with setting goals. This sounds like a no brainer but setting goals without a detailed plan results in foiled accomplishments. Review your past goals to understand what allotted for success and what goals have you not accomplished and why. Look forward, determine your top priorities, set clear and actionable goals that align with your vision, and determine how to measure them.
Visions vs goals vs objectives
When setting effective business goals, understand your reason, direction, and methods. You should have a visionary goal in which your short-term and long-term goals reside in. Your visionary goals should reflect on the reason your company was founded and how you can renew and transform the future of your business. Within an established vision, all goals and objectives should align and act as deliverables to achieve it. To distinguish the difference between goals and objectives, also think of objectives falling under a certain goal. Business goals are generally long-term and should be an initiative to your operational changes and how you will execute it. Business objectives are more specific, short-term steppingstones that help you track and make progress toward your goals. As outlined in Inc. magazine, your goals should also fall into four visionary themes: service, social, profit, or growth.
- Service: These pertain to customer-focused goals for heightening customer service or improving customer retention. If your visionary goal is to improve customer satisfaction, your following long-term goal might be to create an omnichannel customer experience and your short-term objectives might include researching customer preferred channels, updating mobile site, and providing cross-channel customer support.
- Social: Social goals involve philanthropic involvement or volunteering to give back to your community Whether your company ought to redesign product packaging to be more eco-friendly or simply participate in a food drive, corporate social responsibility and philanthropy can increase employee engagement, brand awareness, and customer loyalty.
- Profit: This encompass the all-common business vision of increasing revenues. Most business want to make money, but how? As your business plan and operations should reflect your vision, think about how you can set specific goals that concentrate on increasing profits through objectives such as increasing customer retention, increasing order sizes, or maximizing cash flow.
- Growth: The visionary goal of growth is another common vision that should help you define your short-term and long-term goals and ensure that they are milestones in achieving business growth. These long-term goals might include company expansion through increasing operations, entering new markets, or broadening product/service range. Objectives that might fall into those goals could include increasing employees or taking out a business loan.
If you determine your business’ key visions, and then create long and short term goals that will help you achieve them, you may find yourself and your employees concentrating less on what it is they are trying to do and, and more on how to get it done efficiently.
SMART business goals
To go beyond the realm of blanketed and generic goals, follow the S.M.A.R.T. goals setting guidelines, an acronym tool for outlining efficient and productive goals.
- Specific: Goals should be well-defined, focused, and concrete.
- Measurable: Quantify your goals with a measurable outcome by identifying a metric. You want to be able to track your progress and review your results.
- Achievable: Goals should be challenging and inspiring, but not impossible or delusional. Venture capitalists and lenders will discard unattainable business plan, and you can set yourself up for failure if you dream too unrealistically.
- Relevant: Think about why you’re setting these goals. Business goals should add value and align with the scope of your mission. Your goals should be relevant to your business and the current conditions and realities of the industry climate.
- Time-based: As well as being specific and measurable, great goals will have a target time attached to them. Choose an objective time frame and set milestones to monitor progress.
Focus on your strategy in achieving your goals, the steps forward you want to make, and your how-to plan on implementing them. Make sure your goals do not conflict with each other and work at co-creating goals with employees to solicit input and spark ownership and motivation.
Analyze Business Projections
Using your new year SMART goals, you can get into the nitty gritty of your business strategy. Find where your goals will fit and what operational changes need to be made in order to achieve them.
Start revamping your business plan by reassessing the interworking of your business cycle. Evaluate your current strategies and determine which areas need to be reassessed. Study your industry’s competitive market and identify challenges. Find a strategy for eliminating any bottlenecks or impasses. Ensure you are measuring KPIs with the same metrics each time to see patterns. Be detailed, focused, analytical, and forward-thinking, and take input from managers, stakeholders, and suppliers. If you’re a start-up, SBA has a great resource here as a guide to putting an initial business plan together here. Once you have goals and a business plan, start allocating energy and resources into what you can accomplish and how you can do so.
Preparing for a new year begins with an end-of-year analysis and planning your revenue goals. Reflect on past reports to predict future performance, focus on the data, forecast sales, assess risk, and factor in new operational plans into projections. Poor forecasting can sabotage your new goals and strategies, so make sure you use reliable calculations and well-suited accounting software tools for your business to help organize and analyze your finances. In addition to evaluating end-of-year finances, ensure that you measure predicted changes based on your 2021 goals, and add market research to your analysis.
In order to accurately project finances, you should assess your current situation these business planning and projection tools.
- Sales forecast: Predicting your 2021 sales sets the standards for expenses, profits, and growth. Reevaluate how accurate your past measurements and models were and assess your base for measuring sales and conversion rate calculations. Match line of sales with accounting structure so you can accurately track forecasts vs. actual sales. Look at your historical statistics and investigate multiple sale factors.
- Balance sheet: Review your balance sheet to make informed financial accounting decisions and identify trends. Breaking down how your assets, liabilities, and equities all sit next to each other can help track your profitability and determine the best financial strategies for the new year.
- P&L statement: Look at income statements for insight on all business activities and financial picture. Here you can assess expenses and budget, sales projections, and cash flow statements to project your profits and losses.
- Expenses: Look at past expenses of supplies, machinery, marketing, labor, and others to see where you might be able to eliminate or streamline expenses. Research the cost of your new year growth goals to update and project expenses for 2021.
- Budget reports: Assess current budget performance in order to forecast a more accurate budget for the next year. Look at expenses to make sure budgets are reallocated and up to date with new year goals
- Cash flow statement: Look at operating, financing, and investment cash flow to determine inadequate cash flow reserves and where you may need an influx. Looking at your sales forecast as well as expenses, you should be able to decide where, and how much you need to inject cash into your operations.
Once you have your financial projections, you can use your reports to determine and potentially apply for financing to fulfill your expanding goals.
After determining your goals and reviewing the last fiscal year to make projections, you’re on pace to arranging your finances successfully! Use financial projections to determine financial needs. Look at your available credit and what your projected capital needs are. If you are setting new goals and focusing on growth, maybe entering new markets, investing in new equipment, or increasing work productivity, sufficient working capital is fundamental to set them in motion.
A growing business presumably requires financing to help bridge cash flow gaps. Whichever operation you are recapitalizing on will require advanced cash flow, so be sure to set specific goals, revise your strategic plan, and utilize your financial projections to determine what assets or cash-flow can secure a business loan and what type of financing option will best suit your 2021 goals.
Apply for a small business loan
If you are lacking on-hand capital, apply for a business finance loan using your well-prepared projections. Weigh the options between traditional lenders such as banks and alternative lenders such as LQD Business Finance. If you need a faster, industry-specific loan that fits your unique needs, an alternative lender is the best choice for you your small but growing business.
Choosing the right financing option
Consider the type of loan option that will work best for your financial goals, gaps, and projections. Do you need a term loan or a line of credit? Do you have collateral to secure a loan, or are you going to be looking for an unsecured loan? There are many resources out there for you, but these articles from Entrepreneur and business.com outline different loan types, programs, and financing options to help you get started.
If you need a short-term loan to resolve constant cash flow inadequacies, maybe using your invoices as collateral with accounts receivable financing for an upfront cash influx is right for you. Consider machinery and equipment financing if you’re updating equipment, or look into inventory financing, if you have well-managed bulk stock. If you’re looking to grow with large purchases, but don’t have the cash to fulfill them, purchase order financing may be the solution for you. If 2021 operations include entering new markets or various operational expansion, consider a growth capital loan, or turn to acquisition financing, if you have the opportunity to purchase another business. There are many options out there to help you meet your specific goals. Check out LQD Business Finance to learn more about our different financing solutions.
If you are setting 2021 goals, it’s acceptable to require funding in order to achieve them. But before jumping into a business loan, start with your specific and measurable goals, assess your finances to make projections, and arrange your business finance needs and the best method of obtaining your advanced cash flow. Take your time, and whenever you are ready for small business funding, start a conversation with LQD Business Finance and apply for business financing to establish 2021 growth.