How to Balance Short Term Financial Goals to Achieve Better Results
5 min read
If we lived in an ideal world, your business will exceed projections, execute excellent investment plans and create an ideal financial balance. As an entrepreneur, the hardest challenge you will ever going to face is balancing long term and short term financial goals. Finding that right balance is key to keep your business in good health.
Even with a diploma in business management, you may still have issues balancing short and long term goals. For instance, if you focus only on your short-term goals, it would be walking without a direction. On the other hand, if you focus only on your long term goals, your company will struggle again. For these reasons, we’ve picked some tips and examples to help you balance your short and long term goals.
Short Term Goals – A Way to Reach Long Term Goals
To put it simply, short term goals are just tiny pieces of the bigger puzzle – long term goals. One way to balance your short term goals is to break them down into several tasks on weekly or monthly basis. This should help you oversee the process of achieving the long term plan.
As you go through the process you will learn which ones are more significant than others and prioritize them, so you can get closer to your long term goals.
For instance, the long term goal of your venture is to expand your manufacturing sector. Machines are expressive and to reach this goal, you will have to allocate money to it. You can secure the needed investment amount by cutting expenses in some other sectors, or going to the bank for a loan.
Evaluate Options to Keep Your Goals Aligned and Balanced
Sometimes there might be other solutions, more fitting to your end goal, which align better with your other goals. It is worth evaluating every option you have and putting it against your long term goals before deciding which path to take.
By aligning your long term goals you can find the perfect balance for your short term goals. Going back to the previous example – opting for a bank loan to finance your manufacturing expansion, it is important to carefully plan your milestones.
Having well-defined and clear short term goals (milestones) will enable you to keep your debt in check and prevent you from losing track of your business direction.
Retain Loyal Customers and Attract New Ones
The primary purpose of any company is to retain loyal customers and attract new ones simultaneously and to have the capacity to meet both their demands. Having a loyal customer base will give you a somewhat fixed revenue stream which will enable you to plan your goals with a stable financial balance.
Therefore, when aiming to capture more market share i.e. attract new customers, you will be able to balance your short term goals more accurately and allocate the needed finances with more precision.
Moreover, such clearly set objectives will enable you to balance your financial goals precisely and understand where exactly you should invest in order to increase your capacity of meeting the needs of more customers. E.g. you may need to further develop your production capacity, whether through machines or personnel, or find new suppliers etc., depending on your situation.
Adopt New Technology
As you come in contact with some new technology or method, you must build a strategy on how to use for your own benefit. If it benefits you today, then you must act quickly by relocating some of your finances to it, or again raise a loan to invest immediately.
However, remember to evaluate the priority of this goal, in contrast with your other goals, and see how it will help you in the future. Sometimes one technology can provide you various benefits at once, from cost efficiency all the way to improved product quality. However, it is important to keep your goals in check and well balanced, so that one new goal doesn’t disrupt the progress you have made with your other goals.
Developing a strategy for a new product can create an imbalance with your goals. As you acquire new data from your sales and marketing teams, you have a clear picture on what your customers want.
However, will that change need to be administered immediately or should you plan it for a later stage? You should pick one that suits your both long and short term goals. To make that decision you will need to perform a market research.
Moreover, a lot of entrepreneurs create too much hype about their new product and fail to deliver. Usually the problem is not funding their development, but the short time frame they planned for the launch. Not delivering features as promised is negative marketing that no business owner desires.
Reflect on Why You Started Your Business and Multiply It by 10
We all dream big and it is very common to set goals that are too ambitious and that may discourage you when comparing your progress to where you should be. This conflict begins when the short term goals don’t match the long term goals. A wise man we love to follow teaches the 10X Rule: “Wherever you set the bar for your goal, if you shoot for 10X the results, you’ll end up in a much better place.”
Aiming to achieve 10X the results will help you to get better results than your average realistic goals. Simply because striving to achieve high results isn’t the same as aiming for ‘realistic’ normal results.
Therefore, don’t be afraid to aim high, because most likely you will achieve more than if you just focused on average goals.
In the end, plans are made to be fulfilled, but that does not mean they cannot be changed or adapted. Therefore, you must keep reviewing your progress in order to adjust your short term goals accordingly. Finding the right balance between your long and short term financial goals will impact the future of your company.
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