According to the Census Bureau, there were 5.4 million applications for new businesses in 2021, which is one million more than the number of business applications in 2020. There’s a strong entrepreneurial spirit running through the U.S. economy, and if you’ve started a business, this is a great time to do it.
What are you hoping to accomplish in your first year?
Your financial goals will depend upon the type of business you’re running and your clientele. The plan will ultimately depend on how you finance your business as well. If you have loans to pay off or investors to satisfy, your goals will look very different than if you’ve begun a home-based business with very little overhead.
Here are three financial goals for your first year of business that will apply to any industry or company.
1. Create A Financial Plan
In order to be profitable, you have to organize your finances.
Hopefully, you have created a business plan or you’re in the process of implementing it. The first year of business will require a lot of trial and error. When you have a plan for how you’ll structure, track, and analyze your finances, you’re setting yourself up for accountability and success.
A good financial plan will include income and expense statements, a balance sheet, budget projections, available cash, and outstanding debts. You’ll know whether your business is sustainable when you have a financial plan in place. All of your financial goals will flow from this starting point.
With your financial plan in place, you can assess your business’s financial needs, identify where the most opportunity may be, and create a strategy to deal with any challenges such as cash flow problems or debt. You can project growth over time and make plans for how to be profitable now and in the future. You’ll also look good to potential investors and lenders if you need to go in search of additional funding.
When it comes to profits, be realistic about what you’re hoping to achieve in the early days of your business building. During the first year, you may count it as a success if you break even. Any kind of profit or growth is a win early on, and if you can keep expenses low while setting goals for ongoing revenue, you’ve successfully achieved the goal of creating a financial plan for profitability.
By the end of your first year of business, you should have established your financial plan and begun using it to make business decisions.
2. Establish A Customer Base
You’ll need some customers or clients to feel successful one year into your business plan.
Whether you’re selling a good or a service, you need to know where to look for potential customers. It’s not always easy for a first-year business to decide where their clients are and how to reach that target market. You’ll need to understand the pain point that your business can solve for those potential customers. Spend some time studying your market. Get to know what your customers need, what they don’t need, and what they’re willing to spend.
When you can structure your business operations and your marketing strategies according to what you learn, you’ll have an easier time attracting tenants. Get into the business community and network with people active in industries that touch your own.
Remember that most businesses are based on relationships. Establish those relationships before you begin the hard sell. This will position you to do better business and to attract clients who are more likely to be loyal to you in the future.
By the end of your first year in business, your goal should be to have a reliable customer base that you’ll be able to grow over time.
3. Attract Partnerships That Will Build Your Business
You may not think of people as being part of a financial plan, but they are. Decide who you want to surround yourself with in your business, and why. Whether it’s staff, partners, mentors, or experts in your professional network, building those relationships will benefit your business and your own personal growth.
You need other people to invest in you and your business. By the end of your first year, make sure you have a team assembled to help you reach your future business goals.
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author.
He’s been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What’s Your Story, and more.
He loves to share his personal finance tips and money management wisdom with others on his website, ShawnManaher.com, to help them find financial freedom.