The setting was that of a corporate training program in a plush, five-star hotel. The top management from a rapidly growing financial company was in attendance. The renowned trainer put a brown box in front of each participant. To their astonishment, it contained a 1000-piece jigsaw puzzle. The instructions were simple: each participant would complete his puzzle and the one who completed fastest would be the winner. The time limit would be an hour.
As the trainer signaled to start, each manager poured out his puzzle pieces, feeling quite sure of himself. Before they knew it, the little bell keeping time tinkled. Not one of the participants had completed his puzzle. The reason: they did not have a picture with which to compare their efforts. While they joined the pieces they thought fit, they didn’t really know if they were doing it right.
The trainer went on to explain the purpose behind this activity, leaving them with a single, troubling question: do you have a clear picture of where you want your organization to go?
If you can relate to this anecdote, it is time for you to create concrete financial goals for your organization. Here are 3 simple steps to help you get started.
Step 1: Envision the End
In the above example, if the managers had even a few seconds to glance at the desired picture, solving the puzzle would have been much easier. Take a few minutes to envision where you want your organization to finally be. Think: where should it reach at the end of this financial year? In 5 years? In 10 years? Also consider: Which goals are urgent? Which are important for long-term growth? Which are easily achievable?
List these short-term and long-term goals on paper. These could well become the base for your Mission Statement. If you have already have one, refer to it and edit your goals to align with it better.
Step 2: Consider the Costs
What will each goal require? Make a list of all the resources you need: money, manpower, machinery, etc. For instance, to achieve more sales, you may need to hire additional staff, buy or rent equipment and increase the promotional budget. Also consider the areas in which you can reduce or eliminate expenses to free up funds for the new goals.
Step 3: Be SMART
Review your goals to see whether they are SMART, that is, Specific, Measurable, Achievable, Relevant and Time-bound. For instance, “We will make a contingency fund” is not a SMART goal. Instead, plan SMART; “We will create a contingency fund of $2,000,000 by June 1st by depositing 1% of monthly profit into a fixed deposit account with the bank.”
This simple, 3-step exercise will help you create concrete financial goals for your business. Once you complete it, you will be ready to begin working towards achieving them. After all, as the adage goes, well begun is half done!