Listen up. This is the only acronym you need to make SMART financial decisions

Within the Franchise Finance Business Training Academy, we run business planning workshops for franchisees. At the outset we explain that before making financial projections, franchisees need to be clear on what they’re trying to achieve and then set the numbers around this rather than the other way around.

Of course, our emphasis here is on the business objectives but these should be aligned to the owner’s personal goals in order to maximise the chances of success. Also, if there’s more than one owner, it’s necessary for clear communication and alignment between the various parties before they set off on the beginning or next stage of their business journey.

However, that leaves us with the question of what makes a good business objective? Is it a phrase like: “Recruit some more staff so we can increase sales”? No – that’s far too woolly and imprecise.

When we set our business objectives they must be Specific, Measurable, Achievable, Realistic and Timely (SMART). So, the previous example should perhaps read: “Recruit two more sales people by the end of this financial year in order to increase turnover by a further £90,000 per annum in the following year.”

This is much more specific because we’ve said how many staff members and it’s certainly measurable because a target increase has been set. The business owner can use their knowledge of the market and resources to gauge whether it’s achievable, realistic and a time limit has been set for the recruiting.

Having now set our SMART business objectives – and please commit them to paper and share them with your business partners – we now know where we’re trying to get to on our business journey. But what or who is the first thing that’s likely to stop us getting there? Answer: Ourselves.

Will we use the right behaviours? Do we have the necessary skills and knowledge? We may need to change some of our habits and develop some new expertise and awareness. We’ll need to invest some time in order to do this.

Time is a precious commodity so why not make some set appointments in your diary with yourself, to not only work on the business as opposed to working in the business but also to work on yourself?