At this time of year many of us are focused on setting goals and setting ourselves up for success. But how often do you revisit your goals and look at how you’re tracking against them? Regular check ins can help you spot trends, adjust and adapt.
Knowing your numbers and how to use them to reach your goals is no different. By making sure that we’re regularly reviewing our progress we can avoid disappointment and confusion.
Let’s look at an example. Imagine that your goal is to buy a new car worth $54,000 with cash by the end of the year. If you set this goal but don’t make a plan of how to get there, (eg put $4,500 in a separate savings account each month) or review how you went each month, imagine your shock if you got to the end of the year and you only had $20,000 in your savings account! If we’re regularly reviewing our progress, we’d know that a few months we forgot to move the money to the savings account and another few months we only moved $2,000 instead of the budgeted $4,500. We would’ve been able to adjust our savings to reach our end goal if we were checking in each month.
So how can we use this knowledge to make sure that we make our dreams a reality?
Compare your budget to your actual results.
Even if you don’t have an official budget, this first step is about comparing your expectations to what happened. You can then make more informed decisions and change direction quickly if needed.
If you’re looking for a process to make this easier, read this article.
Determine why there were changes
Highlight the larger or unexpected differences found in step 1 (positive or negative). Now take a deep dive into what caused them. Did you run a successful promotion or collaboration? Did you increase your prices? Was there a downturn in sales due to external factors such as the impact of lockdowns in the community?
Determine what you can do to mitigate any losses
Where you haven’t performed as well as expected, think about what proactive action you can take right now to turn it around. For example, if your income dropped, can you consciously and personally reach out to your ideal clients? Or create a new resource that can help with changes in the business landscape?
Think creatively with this one, as you never know what idea may turn out to be a good one!
Check whether your assumptions are outdated
This is one of the best benefits of making sure that you’re regularly reviewing your numbers. You may have budgeted for an investment in your business based on assumptions that you made when the budget was created.
For example, if you decided you were going to spend $2,000 on Facebook Ads next month however you haven’t made many sales of your product or service and your conversion rate is exceptionally low, then perhaps your investment should hold off until your conversion rate increases.
Being proactive and in control of what’s happening with your money allows you to not only step up as the CFO of your business but can help you become more agile with your actions and decisions.
If reviewing your numbers regularly doesn’t sound like your cup of tea, then get in touch. With my Measure and Manage package I conduct monthly reviews (including forecasting), compare your results with goals and trends then share my recommendations and ideas with you. If you’d like to know more, simply contact me here or visit my website.
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