It’s great to set goals, but a goal without a plan is just a wish.
Entrepreneurs can always tell me about their marketing plan, or their recruitment plan, but when I ask about their financial plan?
In this post, I want to set out the steps to get intentional in setting goals for 2022.
After all, you can’t know where you’re going if you don’t know where you’ve been…
Start by reviewing your finances for 2021
I actually talked about this in detail last week, and you can check out the blog post here.
Once you’ve got an idea of what your financial data was for 2021, it’s time to consider your accomplishments. What went well in your business?
This is something that business owners are generally bad at, but I want you to practise this! Learn to identify what was good, and double down on it!
The flip side of that, however, is considering what didn’t go so well. Be completely honest and ask yourself what were your biggest business failures in 2021? What could have gone better?
You’re the owner of your business – the buck stops here!
It’s important to understand not only the successes and failures in your business last year, but your financial breakdown. Your revenue, expenses, how much profit your company made and how much money you were able to put in your pocket.
If the idea of tackling your financial data makes you want to run and hide, don’t panic. My free Profit Plan has you covered.
But reviewing your previous year’s finances is non-negotiable if you want to reach your goals in 2022.
Decide how much money you want to make in 2022
I don’t mean how much money you want your business to bring in.
How much money do you want to make this year? What figure do you want to see in your personal bank account?
How much money do you want for the life you desire?
This is a great opportunity to daydream. Think about your dream car, dream house, dream vacations… When we consider our ‘dream life’ it always seems like such an unattainable goal.
But if you really consider what it is you want in your dream life, if you write it down, you’ll find it’s closer than you imagined. Because you are getting intentional with your goals.
I do this exercise all the time with my clients, and 99.9% of the time, they’re shocked at just how low that ‘dream figure’ actually is.
I’ve lost count of the amount of times I’ve started this exercise, and my client has said ‘Oh, I need a million dollars’. But when we’ve worked through it – when we’ve written down the exact things they want and put a price tag on them – they can’t believe how low that amount really is.
So daydream about the life you desire – but do it intentionally! Get those things down on paper and give them a price tag!
Work out how much money you need in 2022
Needs and wants are very different things. We want enough money for our dream life, but we need to make sure we can cover our current financial life.
You need to know TO THE PENNY what it costs to sustain your current life.
I hope this is a figure you already have an idea of, but if not, make some time to sit down this week and work it out!
Decide what impact you want to have in 2022
Living is more than existing. Most people want to know they’ve made some kind of impact on the world, left some kind of mark.
How much money will it take to make the impact you want to make?
Often, this is giving to charity. You might be in a place where you’re not sure if you can afford to give back right now, and that’s fine. I talked about giving back without spending money a few posts back, and you can catch up on that here.
When we set out intentional goals, we need to be following what I call the WIN method: Wants, Needs, Impact.
How much money do you want? What impact do you want to make with that money? How much do you need right now?
Now it’s time to compare your WIN to the amount you actually made last year…
Let’s consider this scenario: imagine your dream life amount is $150000 and your current need is $75000. If you know you made $40000 last year, it’s not going to be realistic that you’ll be making as much as you want in 2022.
But, alternatively, you might find that you actually surpassed your need amount.
If the gap between your dream life and the amount you actually made is too big, you’ll need to reconsider your goals for 2022.
You will never know unless you run the numbers!
Use the data to determine how much you need your business to make
So far I’ve covered the amount you want to make personally. Now we need to think about the money you need to be making in your business.
My main goal for you is that you’re building a business that can sustain your dream life.
You’ve worked out the amount you need to make to live your dream life. Now you need to figure out how to structure your company to give you that money.
(Don’t panic about the financial data side of things – remember my Free Profit Plan will help you track all those numbers!)
Your recurring operational expenses are everything that you pay out for each month for your business. It could be your email service provider, your Kajabi subscription, your QuickBooks.
In order to calculate how much money you need to be making from your business, you need to know how much you’re left with from every service you provide or every good you sell. If you’re a cleaning company who charges $50 per clean, and your team takes $25 of that, you’re left with $25 from that one service.
Once you know how much you’re paying each month in recurring expenses, and how much net profit you’re making from every service, you need to determine how many services you need to provide in order to meet your operational costs:
- Imagine your monthly recurring expenses total $2000
- And your net profit from every service is $25
- The number of services you need to provide is expenses divided by net profit per service
E.g. $2000/$25 = 80 Services provided per month to meet your business expenses.
(You also need to keep in mind that you’ll be required to pay taxes on your profit, so as a rule of thumb you need to allow for 30% towards taxes – but definitely check this with your tax preparer!)
Finally, you need to decide how much you want to actually be taking home as pay. If you decide you want $100000 per year, let’s say that’s an extra $10000 per month.
Remember that $25 profit from every service you provide? We’re going to divide the $10000 per month you want to make by the $25 per service:
$10000 divided by $25 per service = 324 services per month.
Add that to the services to cover your expenses, and you’ve got 400 services per month that you need to provide to make $10000. From that, you’re able to take home $8000 per month.
It’s then up to you to decide whether 400 services a year (or whatever your number turns out to be) is achievable. Can you recruit enough staff, find enough clients?
I’ve given you all the steps you need to be completely intentional with setting your financial goals for 2022. We’ve crunched the numbers (with the help of my free profit plan) and made a decision.
You need to make sure that the blood, sweat and tears you’re putting into your company is going to result in the life you want. Otherwise, you’ll never feel fulfilled
Once you’ve got a well thought out vision for your life, you’re able to take a look at the numbers and determine what your business needs to do in order to achieve that life.
Then you can make an informed decision on whether you’re up to the challenge!
I’ve talked through a lot of detail on setting intentional goals in this post, and I really hope you’re able to use the information I’ve provided. If you’d prefer to view the live training, you can watch it on YouTube.
Please make use of my Profit Plan to crunch your numbers – it’s the key starting point for setting intentional goals for 2022!