Great leadership requires the ability to control what is in your power to control, to give people clarity, direction, and a sense of security, to chart a course and set goals your employees believe are attainable. As we begin a new year, it is your job as the business leader to set and communicate expectations for the year ahead. From strategic initiatives to marketing campaigns, from new positions to new product lines, your company is waiting for you to clearly set the goals for the new year.

It also falls on your shoulders right now to make sure that your financial house is in order, that you understand thoroughly where you are today, how you got there, and have a plan moving forward.

Three areas of financial focus for Quarter One

We’re all eagerly anticipating good things from the year ahead. But hoping is one thing, preparing is another. Here are three financial objectives you really need to have in order to start the first quarter off right:

1. Set Your Budget - Your budget is the financial plan for managing and controlling revenue and expenses over a period of time. Budgeting is a core business practice and a fundamental management tool that keeps you and your employees on course, and provides the radar to tell you when you're off course. It's fairly short-range radar — most budgets look ahead month by month for one year. It's operationally oriented to help you and your employees manage the business on a daily basis.

   A budget is developed from past trends and future predictions, and is a forecast of your income statement. It emphasizes profit and the path you intend to take to generate that profit. In addition to planning how you will operate in the near future, your budget is also a control device. It helps assure that proper measurement and evaluation procedures are established throughout the company. It provides a plan so that everyone knows where the business is going and what you expect by way of performance. It also gives you a way to measure that performance.

   Need help developing a budget? The E-Myth Online program has extensive information, worksheets and examples that will help you with budgeting and much more.

2. Determine Your Financial Goals - A big part of your budgeting process revolves around the financial goals you’ve set for the year ahead. Where do you want and need your business to be at the end of the year?

   The main purpose of creating a budget is to plan the monetary results you're going to achieve during the coming year, and then ensure that you realize those results. Rather than wait until the end of the year to see what happened, track your progress monthly and make adjustments as the year progresses. This dramatically increases the likelihood that you will, indeed, accomplish what you've set out to do.

   If you haven’t already, it’s time to set annual goals (either revenue/profit or both). You can then break these goals into a series of twelve monthly goals for short-term strategy and monitoring. Remember that these are first-pass goals that will be refined as you grow your business.

3. Communicate to your Team - At E-Myth, we talk a lot about the importance of creating your Company Culture, or “the way we do it here” and communication is the key. You need to make sure that your employees understand the idea behind the work they’re being asked to do. The most effective strategy is to broadcast and reinforce your vision and goals at every opportunity. This includes your financial goals. You may do this in a special meeting or incorporate it into your regular team meetings, what’s important is that you share your goals so your team can help you get there. Ultimately, you need your team to be working toward the same goal—financial success.

   Some business owners are leery of sharing financial information with their employees while others believe in total transparency. Ultimately, how much you share is a personal decision. It’s up to you to decide what you’re comfortable with. At the very least, we recommend you share enough information so that your employees understand the overall financial health of the business.

   One way to do this is to make sure that everyone in your business is aware of the financial implications of their respective positions. People who have no financial information can’t be held accountable for managing financial performance. They have to know the financial dynamics of the positions they hold before they can make positive changes. This can be a tricky topic, and we have an entire process in our Mastery Impact! coaching program dedicated to bringing financial awareness and accountability to employees at all levels of your organization. The bottom line is that the more that managers and workers become aware of their impact beyond their own positions, the greater their appreciation of their roles within the business and the greater their positive impact can be.

How your business does in Quarter 1 sets the tempo for the entire year. Make sure that you set the right tempo for the year ahead with clear direction, a realistic budget and the support of your team. Here's to your success!

Share Your Story

Have you set your financial goals and budget for Q1 and beyond? Post a comment below and tell us about your challenges and triumphs.

Further Reading

Practicing Financial Leadership
Company Culture: A Game Worth Playing
Your Cash Management System

Six Steps to Maximize Cash Flow

Need help controlling the cash flow in your business? At our Six Steps to Maximize Cash Flow virtual seminar on January 21, an E-Myth Business Coach will help you identify and maximize the cash in your business. We’ll offer tips you’ve probably never even considered…

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Tactics for Seasonal Business

The pressure in a seasonal business requires that you succeed in a short period, then plan and cope through the down times. In the first part of this article, we talked about some of the strategies you can employ behind a seasonal business. This week we're offering some tactical tips to help you plan for the ebbs and flows.

Tactics that Alleviate the Pressure

To help maximize your skills, time and resources, follow this list of tactics:

1. Budget. Establish a tight budget and stick to it all year long. Avoid the temptation to spend when you’re flush with cash. Money management is always important in any business, but even more so to the seasonal business that must stay on top of an uneven cash flow.
2. Create a cash reserve account for lean months. Save, save, save, and save some more!
3. Create a cash flow forecast. Cash planning helps identify patterns and lets you see what you’ll be facing in the future.
4. Manage your time. Master your time management skills so you can work 80 hours a week in season and 10 hours a week off-season and still be efficient and know your priorities.
5. Market and Promote. Use slow times to devise marketing plans, conduct customer surveys, catch up on maintenance or strengthen client relationships. Send mailers, make calls, set-up meetings.
6. Create the right team. Use only a small core of permanent employees and consider temps and part-time workers when needed. Planning ahead is essential to your staffing needs. Aside from cash flow, the second biggest struggle for a seasonal business is often one’s people strategy, causing management challenges. Constantly having to recruit, hire and train new workers can put an added strain on tight resources. It may pay to hold onto workers. If not, keep in touch. Make working enjoyable. Give them incentives to come back the next season. Organize events when working to build teamwork and community, encourage employee feedback and offer performance based financial incentives.
7. Keep stock levels low. Carrying unneeded inventory ties up cash you may need elsewhere during the slow season.
8. Look for deals. Shop for the best discounts from suppliers; then build strong relationships with them to establish credit so you can extend payments if necessary.
9. Generate revenue. Offer off-season sales or rates, and look for ways to generate revenue during quieter periods.
10. Update your website. Off-season is a great time to enhance your website and jump into social networking and other forms of web marketing.

Develop Your Business

Though most small businesses are affected by seasonal changes, a seasonal business depends on them. Being profitable in the face of uneven cash flow, unpredictable sales, and high employee turnover requires a great deal of planning and ingenuity. With the right planning and execution you can alleviate the pressure and find fresh ways to view the opportunities as they present themselves.

One clear advantage to a seasonal business is that when operations stop or slow down you have a perfect quiet period to regroup and refocus. What better time to work on it, instead of in it, when there isn’t much in it going on at all.

The real key to making your seasonal business a success is the creation of good controls along with engaging in strategic thinking that may unlock new ideas that capitalize on your assets and create new markets for the slow times of the year.

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