09 Apr Financial Business Strategy: The 5 Fundamentals
Whether you’re a well-seasoned business professional or a new small business owner, having a successful financial business strategy is key to having a successful business. So, when you sit down to reflect over this past year at your big company meeting or when you develop your first business approach, consider the strength of your financial business strategy.
As you review your business agenda, we have a few tips we’d like to share.
5 Fundamentals of a Successful Financial Business Strategy
Over the past several years, Two Roads has worked with a variety of companies, and during our interactions, we’ve noticed that the companies with the most successful financial business strategies all incorporate these five basic fundamental steps somewhere in their strategy.
1. Get Some Perspective
The first step to creating a successful financial business strategy is to get out of the office and get some perspective.
So go ahead and grab a cup of coffee, go for a drive, or walk your dog and spend some time thinking about the answers to these questions:
- What is my overall objective?
- Where am I now?
- Where do I want to be?
- How do I get there?
By evaluating where your company is now and where you would like it to be in the future, you can begin to develop a game plan and set reachable goals that will help you reach your overall objective.
2. Develop a Game Plan
An effective game plan is perhaps the most crucial part of a successful financial business strategy. Your game plan is developed in response to where you are and where you want to be as it relates to your overall objective. It should be designed with specific steps or tasks in mind and will serve as a guide to help you achieve your goals.
For example, if you want to increase your revenue, having a game plan that focuses on decreasing loss, suggestive sales, or new customer acquisition could be beneficial.
Once you’ve decided how you want to go about reducing loss (customer communication), or boost sales (promote a special), or acquiring new customers (social media campaign), you’re ready to begin setting some short term goals.
Two Roads Tip: It sounds simple, but regularly talking to your customers will help reduce loss. It’s easy to “sell” a new client but then forget about them once they’re on board. Keep asking questions about how you can improve and serve them better.
3. Set Reachable Goals
Goals are an important aspect of an effective game plan because they provide the motivation needed to reach your overall objective. However, be cautious when setting your goals.
Although you want to push yourself to do better, an impossible goal can push yourself into discouragement.
For example, if you want to increase your company’s annual revenue by 25%, that’s a great objective! But it may not be reasonable to expect to get there by setting a goal for a 25% increase in sales every month, especially if your business naturally ebbs and flows throughout the year.
Instead, having several smaller goals (such as a 10% increase in sales, a 10% decrease in loss, and a 5% increase in new customers) would be much less overwhelming (and much more attainable!).
4. Re-evaluate Your Game Plan
In order to make your business financial strategy the most successful, regularly track your company’s progress and compare it to your overall objective.
As you review the goals you met and have yet to meet, begin re-evaluating your game plan by asking the following questions:
- What goals am I meeting?
- How am I meeting them and how well is it working?
- Am I satisfied with these results or could I do better?
- What goals have I yet to meet?
- Do I need to adjust my game plan to meet them?
We find that monthly tracking is most beneficial to a successful financial business strategy because it gives you an accurate view of how well your game plan is working.
At a very minimum, you should review your financial reports, primarily your profit and loss statement and balance sheet every three to six months. Compare the reports against previous months and take note of trends, especially those involving income, expenses, and overall debt load.
5. Keep Clean Financial Records
When implementing a new financial business strategy, keeping clean, up-to-date financial records is critical.
We know this can seem overwhelming, which is a sign it might be time to outsource your bookkeeping. Here are some other telltale signs.
Consider using these three financial statements to benchmark and track your company’s progress:
- Cash-flow statement: How much money do you need now and in the future to improve your business financial strategy? Where will this money come? What has to happen for it to be made available?
- Income statement: includes fixed and variable expenses, sales forecasts, and margins
- Balance sheet: includes your company’s assets and liabilities
For more help on updating your business’s financial records, check out our how-to guide.
Every good business has a successful financial business strategy; that’s what makes them “good” businesses.
At Two Roads, we understand that implementing a financial business strategy can be stressful… but it doesn’t have to be!
We can work alongside you while you develop a game plan and set goals to grow your business. We’ll track your progress and provide monthly reporting to give you a detailed look at how your new business financial strategy is accomplishing your overall objective and impacting your company.
We also offer a wide range of other services in addition to the financial statements mentioned previously. For more information on how we can help you implement a new financial business strategy or make yours more effective, please contact us at 865-212-0063.
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This article was originally published on July 7, 2015, and has since been updated.