Do you know how to set short-term financial goals for your business?
In the age of the internet, many people consider starting their own small business in order to make more money. It’s never been easier to start a business on your own, but it takes a lot more energy and effort to keep it running.
While there are many people out there who will have opinions on how to run a small business, there are only a few things you need to keep in mind at the beginning. The first thing that should be most important to you are your financial goals.
So what kind of goals should you set? With the right expectations for your business’ immediate success, you could be running a business you love in the years to come. Check out these short-term financial goals that will help you start a small business.
1. Track All Spending
The first thing you have to do when you start a business is track all your spending. You won’t be able to start your business for free, so you’ll need to know how much you need to spend and how much you’ve already spent.
This is really key to making your first profit. You won’t know when you’ve made that first profit if you’re not sure how much money you put into start your website, renting your office or whatever you had to do to get your business up and running.
Write down everything you spend each month, so when you start recording the money you make alongside that list, you’ll know when you’ve actually begun to make a profit.
2. Decrease Your Costs
After you’ve recorded a fair number of costs, try to decrease them. This will look a little different for every business, but work things out depending on what you spent the most on.
If your business is an Etsy shop, you might make home decor by hand. Take a close look at what supplies you use to make the decor and if they can be bought anywhere else for a cheaper price.
You can also look at how you make your products and any marketing costs you spend to call attention to your business. As one of your short-term financial goals, find the balance between spending what you need to and overspending.
3. Set Healthy Milestones
Another area that can trip up new small business owners is their milestones. When you start your business, you’ll be full of dreams and aspirations.
Hold onto those dreams, but recognize that in order to achieve them, you’ll need healthy milestones to get there.
You’ll have healthy milestones when you set goals for yourself that are attainable and have a plan. If you’ve taken out a loan to start your business, what is your plan for paying that off each month and how long will it take to pay it off entirely?
You may also want to think about milestones such as selling a small amount of products during your first month or not expecting sales at all until the end of your first quarter. It’s okay not to make a profit at first, as long as you have a plan to turn that around in the near future.
4. Separate Needs and Wants
After you start your small business, you’ll find resources out there that can help grow your audience and maximize profits. While these can be great to invest in, first you have to have the money to invest with.
The best strategy to take with business tools is to separate your needs and wants. That will help you budget the money you have and ultimately grow it in the best way possible.
An example of this could be if you found two online tools. The first would promote your website to more people through social media. The next would promote your website in the same way, but cost twice as much. Still, it’d run ads to a larger audience and provide more analytical tools to find out where your audience was coming from and what about your site interested them the most.
While the second program would supply you with information that could help grow your business more, spending twice as much money isn’t smart. Settle for what you can afford and make a note to come back later for an upgrade.
5. Keep Taxes in Mind
Something that intimidates many small business owners is the thought of having to file taxes. They get much more complicated when you’re filing for income that isn’t just from a paycheck, but they don’t have to be scary.
A good short-term goal to be responsible with money management is to plan for quarterly tax payments. If you’re making a profit, you’ll have to pay taxes on that income, which catch some small business owners off guard.
Wondering what these taxes are all about? As an employee of a company, your company held back taxes from your paycheck before it ever reached your bank account. This was to cover Social Security and Medicare taxes, which you could track on your paycheck stub.
When you own a small business, you’re the sole proprietor, so you have to pay quarterly estimated taxes to cover your Medicare and Social Security contributions. This is one of the most important short-term financial goals you can set for yourself since you’ll have a safety net to rely on when you have to pay your taxes.
Don’t let yourself be caught without the money to pay. Set aside a little money each month to create that safety net for quarterly tax payments, and get in touch with a Certified Public Accountant who can help you prepare everything you’ll need for filing.
6. Keep Your Goals Realistic
The best advice you can get as a small business owner is to keep your goals realistic. You want your business to thrive and probably have an idea of what you life may look like once it does, but it takes hard work and time to get there.
Write down short-term, achievable goals for yourself so your business has a clear path forward. Your goals will look like planning for taxes, laying out milestones and recording what you spend.
As your small business grows, you’ll be able to modify these goals. Check back in with them at the end of each month and set goals for the next month. Working in the short-term will help you grow your business at a healthy rate, so your long term goals can be achieved.
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