In an economic climate marked by rapid market changes, soaring inflation rates, and unprecedented shifts in consumer expectations, setting reasonable financial goals for your business is not easy. The temptation may be to bury your head in the proverbial sand of everyday sales, projects, and profit margins and forget the value of setting financial expectations for your business. However, clear financial expectations distinguish industry leaders from their competitors.
Setting Financial Expectations Give You a Competitive Advantage
Setting financial expectations helps businesses clarify and complement corporate goals and foster unity of purpose for their managers and supervisors. Perhaps even more importantly, setting reasonable financial expectations motivates employee performance while providing baselines for evaluation and improvement.
That is why businesses with reasonable financial expectations have a clear advantage over their competitors. To help you gain that competitive edge, the United Consumer Financial Services team compiled the following steps you can take to set reasonable financial expectations and boost the growth of your business.
1. Track and Evaluate Cash Flow
Setting reasonable financial expectations begins with accurately assessing your business’s revenue and expenditures. Without a clear idea of how much cash is coming in or going out, you cannot identify realistic and attainable goals that push your business toward success.
Start by carefully tracking all revenue and expenditures long-term. Ideally, you would closely watch your business’s cash flow over the next two quarters — if not a full fiscal year — to ensure the reliability of your metrics. Plan to evaluate the data halfway through the tracking period and make any necessary adjustments to operational costs by strategically cutting non-essential expenses.
At the end of the tracking period, perform a final evaluation that you can use to derive revenue projections and operational costs. Tracking and evaluating cash flow helps to safeguard your business from making hasty decisions and enables you to set informed, realistic financial goals.
After the tracking period ends, create cash flow evaluations as a regular corporate practice. Doing so helps you modify your strategies early, minimizing waste and maximizing opportunities for your business to reach its stated financial goals.
2. Implement Cost Control Practices
The metrics you have collected are of no advantage to your business unless you use them to create an operational budget and an action plan to achieve your goals. Even though a budget requires forecasting future expenditures, creating and implementing cost control practices helps your business moderate its expenses and stay on track to reach its financial expectations.
Your business probably has an annual budget already, so use your new data to cut, add, or update line items in your yearly budget. Then, work with your team to create a quarterly budget, which allows you to track expenses more closely, adjust with agility, and make cost projections more accurately based on recent expenses over the past couple of months.
Although your budget will inevitably influence what financial expectations you set, allow your financial expectations to affect your budget. For instance, if one of your goals is to increase annual sales by 15 percent, allocate more funding to your marketing budget or training costs. The reciprocal relationship between your budget and financial expectations may seem like a balancing act, but getting that dynamic right will pay dividends for years.
3. Create Actionable Strategies
With relevant data and updated budgets, determine what specific steps your business must take to reach its financial expectations. Include adjustments that need to be made to your business’s investment portfolio, marketing and advertising costs, organizational structure, etc. The goal is to identify specific actions and the personnel who need to implement those changes.
To create buy-in and maintain the trust and support of your business’s managers and supervisors, consider input from the personnel overseeing these changes. Build an evaluation process into your action plan, so your business can make adjustments and your employees can expect regular assessments.
4. Enlist the Help of Financial Advisors
As you set financial expectations, seeking counsel from financial advisors who know the market and the industry or already know your business is essential. A diverse network of informed advisors can help you recognize weaknesses in your action plan, identify ways to boost efficiency in your business, and forecast industry trends so that your financial expectations reflect and anticipate market changes.
As someone who already knows your business, an advisor at your bank can help you tailor your investment strategies and navigate taxes, loans, and payment options to maximize your financial profit. Maintaining open communication with your bank and your financial advisors will help you set reasonable expectations and lead your business to achieve those goals.
5. Prioritize Consumer Financing
Consumer financing is a solid first step toward realizing your business’s financial goals. Providing financing helps increase revenue and provide financial stability while increasing your sales, average order values, and brand sentiment. Through consumer financing, more customers can purchase the products or services they want with monthly payments they can afford. This means more sales and higher customer satisfaction and loyalty — which translates into more profit for your business. Through financing from United Consumer Financial Services, your business receives payment in one to three days, whle your customers make low monthly payments over time to UCFS.
With these five steps, your business will be well on its way to navigating market changes and achieving its financial goals.
Sustained business growth requires strategic planning — even more so when wars and pandemics continue to affect supply chains, inflation rates, and consumer demands. Amid the unpredictability of the market, United Consumer Financial Services is here to help. To learn more about how consumer financing can help you realize your business’s financial expectations today, contact the team at UCFS today.