7 Tips for Setting Smart Business Financial Goals

You know that feeling when you’re staring at your business finances thinking, “There’s got to be a better way to handle this?” Well, grab your favorite beverage (I’ve got my coffee right here), and let’s plow through exactly how to set smart business financial goals that will actually work for you.

Introduction

As someone who spent years in banking before starting my own business, I can’t stress this strongly enough – getting your financial goals right isn’t just about throwing numbers on a spreadsheet. It’s about creating a roadmap that’ll help your business thrive, not just survive. And trust me, it doesn’t have to be as complicated as some people make it sound.

You know what’s funny? When I first started my business, I thought I had it all figured out because of my banking background. Well let me tell you, I was wrong!

Running your own show is a whole different ball game, and that’s exactly why I’m so passionate about helping other business owners nail this whole financial planning thing.

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Prefer to listen? Check out episode 23 of the podcast: How to Set Financial Goals for Your Small Business

1. Assess Your Current Financial Situation

Before we dive into goal-setting, let’s talk about where you’re at right now. (Oh, and don’t worry if your current situation involves a shoebox full of receipts – just pat yourself on the back because you actually have your receipts.)

First up, you’ll want to evaluate three key areas:

Your income (that’s all those lovely revenue streams)
Your expenses (yes, even that “business-related” coffee habit)
Your cash flow patterns (also known as, making sure you can actually pay your bills)

Let’s break each of these down.

Start with Understanding Your Income

When we talk about income, we need to get really specific here. I want you to look at:

Your primary revenue streams (what’s bringing in the most money?)
The seasonality of your business (those peaks and valleys that we all deal with)
Your client concentration (are you too dependent on one or two big clients?) Or your product concentration, same thing. Are you too dependent on one or two big offers?
Your pricing structure (are you actually charging what you’re worth?)

I had a student recently – let’s call her Paige – who thought she was doing great because she was bringing in $5,000 a month. And that is great. But when we dug deeper, we realized half of that was coming from one client. Talk about a risky situation! If she lost that one client, she’d be in big trouble. So, we brainstormed a few ways to diversify her income streams, and now she sleeps much better at night.

2. Track Your Expenses

Now, let’s talk about where your money’s going. And I mean ALL of it. Here’s what you need to track:

Fixed costs (these are things that don’t change from month to month like your monthly subscriptions, rent, insurance)
Variable expenses (these are the costs that might change from month to month. They go up and down.)
Then those sneaky “one-time” purchases that seem to happen every single month
And Owners compensation (because yes, you do need to pay yourself!)

You’re definitely going to want to use a tool to keep up with these numbers. A couple of options I recommend are:

My Finance Dashboard – it’s a spreadsheet system available in both Excel and Google Sheets formats.

Another option is FreshBooks if you want an online system that directly integrates with your bank accounts.

And here’s Pro tip: Set aside a specific time each week to review these numbers. I do mine on Fridays. Put it on your calendar and treat it like a priority meeting – because it is!

Cash Flow Management

This is where things get really interesting (and by interesting, I mean make-or-break important). You need to understand:

Your payment cycles (when money comes in versus when bills are due)
Seasonal fluctuations (like a summer slump or a 4^th quarter boom)
Emergency fund needs (because stuff always happens)
And growth investment requirements (because sometimes you need to spend money to make money – we’ve all heard that)

3. Define Your Financial Goals

Now, let’s get real about what financial goals actually look like when you’re running your own business. This isn’t about copying what the big corporations do – it’s about creating goals that make sense for YOU.

Think about:

Your personal income needs (because, again, paying yourself isn’t optional!)
Business growth targets (but make them realistic – no “I’ll make a million by next Tuesday” nonsense)
Emergency fund goals (because surprises happen, and not all of them are fun)
And Retirement planning (yes, we need to include that too!)

Something to keep in mind. Your financial goals need to align with your lifestyle goals. Do you want to take every Friday off? Factor that into your revenue targets. Are you planning to hire help? That needs to be part of your financial planning too.

Let me share a quick personal story here. When I first started out, I set my revenue goals based on income reports that I saw from other online business owners. (That used to be a big thing. People publish their income reports. I don’t really know if that happens anymore.) That was just a big mistake! These goals were totally unrealistic because I was comparing my beginning to someone else’s middle.

Now, I try really hard not to pay attention when people talk about how much they make. You know all those “do this and you’ll make six figures” or “I made $100,000 on my last launch.” There’s too much you don’t know about those kinds of claims. Maybe they made $100,000 but they spent $90,000 on Facebook ads.

I set my goals based on the kind of life I want to live, and I work backward from there.

4. Prioritize Your Financial Objectives

Here’s where we separate the “nice-to-haves” from the “need-to-haves.” Let’s break this down into manageable chunks:

Start with short-term goals (these are for the next 3-12 months):

Here are some examples, and if you don’t have these in place already jot them down because these are things you definitely need.

Set up a tax savings system (trust me on this one. I had a huge, unexpected tax bill last year. And if I hadn’t had a tax saving account, I honestly don’t know what I would have done.)
Build a 3-month emergency fund – I strongly suggest that you have 3 months of expenses and owner’s comp set aside.
Reaching a specific monthly revenue target – I always think you should have a revenue goal. This is a business. Businesses have revenue goals.
Implement a proper bookkeeping system, if you don’t have one.
Create a business debt reduction plan (if needed)

Now let’s talk about Long-term goals (These are for the next 1-5 years):

Examples might include:

Expanding your service offerings
Hiring team members
Opening a second location if you have a brick and mortar business or launching a new product line
Building retirement savings
Creating multiple income streams

The key is Make sure these goals align with your overall business vision. Don’t just chase numbers – stay focused on your purpose.

5. Set Realistic Financial Milestones

Let’s get SMART about this. You’re probably familiar with SMART goals, but let’s do a quick review just in case. SMART is an acronym that stands for specific, measurable, achievable, relevant, and time bound.

Specific: “Increase revenue” isn’t specific enough. “Increase revenue to $10,000/month by December” is.
Measurable: If you can’t track it, you can’t improve it.
Achievable: You want to Challenge yourself, but you also want to keep it real.
Relevant: Does it align with your business vision?
Time-bound: Give yourself deadlines (and stick to them!)

Here’s a framework I recommend for financial goals:

1. Start with Monthly Revenue Goals:

Set a Base goal (this what you need to survive)
a Target goal (what you need to thrive)
and finally, a Stretch goal (what would make you dance around your office)

2. Next Profit Margins:

you can Industry standard benchmarks for these, if you have
or your current margins, and then
target improvements (I suggest that you aim for 1 percentage point increase per quarter)

If you aren’t sure what benchmarks to use for your profit margin goal, I suggest following the advice from the book Profit First. My profit margin goal is 5%, just to give you an idea. I had to build that up. I didn’t start at 5%

3. The third goal area is Expense Reduction:

Identify your top three business expenses
Set specific reduction targets
Then create an implementation timeline to achieve those financial targets

If you’re like most small business owners, your expenses are likely higher than you realize. My goal is to keep expenses at 30% or less. And that’s as a percentage of revenue.

6. Create Your Financial Action Plan

This is where the rubber meets the road. Let’s turn those business goals into actual steps you can take:

1. Start with Weekly Actions:

Review your income and expenses
Update your financial tracking tools
Schedule upcoming bill payments
Check your cash flow projections
Review upcoming expenses
Track progress on your short-term financial goals

Again, I recommend having a set day of the week that you devote to this. For me, it’s Finance Friday.

2. Next are your Monthly Actions:

Compare your results against your goals
Adjust spending if needed
Analyze customer payment patterns
Check in on tax savings – make sure you’re setting aside enough to cover quarterly estimated tax payments.
And review your marketing ROI – return on investment. Marketing is one of those expenses that can easily get out of hand. That’s why I recommend reviewing your ROI monthly.

3. And then Quarterly Actions:

Do a Deep dive into your numbers. Review and analyze your income statement, cash flow Statement and balance sheet.
Adjust your goals based on performance
Plan for upcoming seasons or projects
Review and adjust pricing
Check progress on your long-term goals

Financial Action Plan: weekly, monthly, quarterly

7. Your Technology Stack

Now Let’s talk about some financial management tools that’ll make your life easier.

1. First Accounting Software:

I mentioned a couple of these earlier.

First is my Finance Dashboard, which is great if you want a make one-time payment and you’re comfortable with spreadsheets.
Freshbooks is an online app that will integrate directly with your bank accounts. You can also use it to send invoices and generate financial statements.
You might also want a receipt scanning app.
And Payroll software if you have team members.

2. Next is Financial Planning:

You’ll likely want

Spreadsheet templates for forecasting
Cash flow projection tools

Just FYI, both of these are available in my course Fearless Finances, and I even teach you how to use them.

You’ll also likely want a budgeting tool. Two that I recommend are:

My Ultimate Business Budget Toolkit
And the YNAB app – YNAB stands for You Need a Budget

3. And then you’ll need Payment Processing:

This will largely depend on the type of business you have. So, a few things to think about are:

Do you need Multiple payment options for clients? Meaning, credit card, PayPal, apple pay, ACH, etc.
Do you sell digital products? If so, then I recommend ThriveCart for payment processing.
Do you need an invoicing system? Again, you can do that with FreshBooks.
And do you need to send Late payment reminders, and if so, do you want to automate that? because chasing payments is no fun.

Action Steps for Setting Smart Business Financial Goals

We’ve covered a lot today and you may be a bit overwhelmed.

So, here’s exactly what to do next:

Block out 2 hours this week to gather all your financial information
Choose and set up ONE tracking tool (don’t overwhelm yourself trying to do everything at once)
Write down your top three financial goals for the next 12 months
And break each goal into monthly milestones
Schedule weekly “money dates” with yourself to stay on track

Remember, you don’t have to have it all figured out right away. Start with these steps, and you’ll be amazed at how much clearer your financial picture becomes.

Before we wrap up, here’s the thing I want you to remember: Your financial goals aren’t set in stone. They’re meant to guide you, not restrict you. As your business grows and changes, your goals will too – and that’s totally okay!