Money Money Money. Don’t worry, I won’t go on despite my inner child continuing to hum. Finances is one thing that businesses either excel or struggle with. Let’s face it, we all like more of it, but how many of us actually track and forecast finances? While I don’t profess to be an expert and none of what I have is advice – it is what has worked for me thus far in achieving my financial goals.

Before I go into tracking financial goals, the best place to start is actually in setting them.

Financial goal setting

I’ve previously spoken on goal setting, hey I’ve even added it to my course, and financial goals are no different. In fact, setting financial goals is critical to business success – otherwise you’re just bumbling along.

The key to any goal setting is not to be the SMART one but to be SMARTER. I am not a fan of SMART goal setting, it falls short of the quality assurance aspects I have grown to need over my years doing QA. Some would even say that financial tracking is the QA to financial goal setting. (They’d be right)

So just briefly, what are SMARTER goals?Specific Measurable Achievable Reportable Time-sensitive Evaluated Reviewed.

success and money and financial goals Kara Lambert Business Coach

Now, I’m not going to go through this in detail as you can read it over here on my original goal setting blog post, but there are some key points you need to pay particular attention to:

Make sure that your financial goal is Achievable. I actually didn’t set my goal until half-way through my second year. That way I had some data behind me on how my sales flowed over time. Not to mention that setting unrealistic goal is a sure fire way to have your ‘bubble burst’ & to feel defeated.

Make sure your financial goal is Time-sensitive. After the first year, my goals roll over and continue. Annual financial goal setting around tax time, or calendar year, gives you some firm dates to work with. (No moving goal posts)

Make sure that your financial goal is Evaluated. This means that it is relevant and appropriate for your industry. It’s unrealistic to set sales target as if you were a real estate agent, when you’re actually a piano teacher. (Ok, a little extreme but you get the picture)

Find a way to track your incoming and outgoing finances

Don’t confuse this with the main aim of this of tracking against a goal. This step is so you know where you are, RIGHT NOW!

Perhaps it’s the time I studied accounting in high school, or growing up with a Mum being a debt collector – it frightens me how some business owners don’t track their sales and expenses and/or use their business funds as a bit of a personal slush fund.

Tracking the ins and outs of my business finances was ok on a spreadsheet, but I really upped my game when I started to use an accounting package.

While a number of people I know use Xero & MYOB, as a bootstrapped startup I needed something to record my finances and I chose Wave Apps. Don’t stress, you don’t have to go get Wave, I’m not selling it (it’s free anyway), if your shoebox/envelope/spreadsheet/MYOB works for you then I am happy as you’re tracking.

I think the thing about moving to an official accounting package was that it all became ‘real’. I had automated invoicing, credit card payment facilities, this sh*t was real! The excel spreadsheet just didn’t have the same appeal.

I admit that moving to a system and inputting the figures and seeing your surplus can be daunting for some, but it’s a fabulous reality check.

So you’ve set a realistic goal and you’re keeping track of your cashflow, now what. It’s time to put your money where your mouth is and dream big.

Tracking your progress against your financial goals

As I said earlier, I let myself work for a while before I started forecasting and tracking. Yes, late one night I thought it would be fun to project out my finances for 10 years. I looked at what my growth had been this financial year over the previous one and used this as my multiplier for the coming years. Look, it’s not perfect but past performance is a better predictor of future performance than plucking a number out of the air! So you know it was 1.8x, yes I was on track to double my business in my second year.

So, I took the 1.8 and multiplied it year on year until I got to 10 years. Yes I realise that I worked in a compounding effect. Believe me, when I saw a projection of half a million dollars and then three quarters I gasped! It triggered a massive reaction against that sort of money. Then I thought, ‘why not!’, why shouldn’t I earn that much, why couldn’t I earn that much, and then I thought ‘ HOW DO I EARN THAT MUCH’.

That was my challenge, how do I grow my business in 10 years to earn three quarters of a million dollars?? I started adding columns to my spreadsheet. I added new programs and offers. I wanted this money, the opportunities (I actually want to employ my husband) it brought. I used the same factor growth on some of these offers and others I chose a more steady linear growth.

financial goals and success Kara Lambert Business Coach

Then I did another thing. I looked at what I would take as ‘pay’ from the business. This is actually my second business, the first is a passion business & I do it for love, and I was adamant that it would be bootstrapped and I would pay myself 30% of all business income (not profit). I am very clear that I pay myself and my debtors first. This sometimes means that I can not make larger business purchases (as a bootstrap business I have invested no personal equity), but I was clear coming into it that this business would stand alone.  I understand that some may need more (or less) and some business structures allow for different payment models. I chose 30% as a starting point. So, I added columns to the spreadsheet to calculate 30% of each product’s income and this represented my ‘pay’. Now this was amazing! This was precisely what my work meant to my family. This is where my motivation took right off.

The next step was a few little lines at the bottom of the sheet that I update regularly. It has my current business income (not surplus), my projected annual income, the difference between these, then my known future sales (I have clients kept on retainer) and the difference again. At the end I have an ultimate sales target. This is the number I use to motivate my actions moving forward. Believe me, knowing what that 30% I pay myself means to my family makes that end sales target all that more special.

So to summarise:- Set SMARTER financial goals- Track your cashflow- Track your financial goals and what it means in your personal pocket

Would you like a copy of my financial goal tracker (all formulae included)? Click here to access the template.

  • Hi Kara

    Great article and time for me to really do something with my financial goals and tracking! Love the look of Wave, by the way (I currently use a spreadsheet, but I have been looking for something else recently).

    I can’t find the link to your financial goal tracker (I’m using my tablet).

    Thanks Kathryn

    • Hi Kathryn
      I am glad you have enjoyed the article. I have had some issues with my downloads, so I have sent it to you in an email. Regards & thanks, Kara

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