There is no point putting your money aside without a plan for it.
I have heard many business owners say they draw money from their profits as and when they have a necessity in their personal or business life.
Apart from a lack of money hygiene in business and personal life, this practise does not allow space for distribution of profits to protect your business and grow your business.
Your net profits every month should be distributed towards 4 areas:
1) Fixed costs for the next month
2) Emergency fund
3) Reinvestment/Growth goals
4) Drawings of business owner
Over the next couple of articles, we will be delving into each of the above. In this article we will be focusing on Reinvestment.
As you draw profits month on month, your business also needs a plan to grow. It could be buying an asset, upskilling yourself, having a new office space. All growth goals need money.
‘SMART goal setting’ is a tool which will make all your growth goals achievable:
S – Specific: Be very specific about your goal. E.g. – Complete LP2 from CII to obtain a Certificate of Financial Services.
M – Measurable: Measure how much money would you need to achieve that goal. E.g. Enrolment and exam fee together costs £400.
A – Achievable: Make it achievable by putting aside money for it month on month. E.g. I shall save £40 per month.
R – Reasonable: Be sure to prioritise your goals
T – Time bound: Put a clear timeline of when you want to achieve the goal. E.g. I want to enrol for the course by Dec 2025 (in 10 months).
This tool allows you to be more specific with your goals, helps you prioritise your goals and measure your goals to being them into reality. Also, your savings are now very purpose driven!
Every pound has a purpose – it is possible to make the best use of it only with a plan.
What are your SMART goals for this year?
As a Finance Coach I work with business owners 1-on-1 to help bring clarity with their money and make sense of every cash inflow and outflow. Want to discover more about how I can help you achieve all your goals? Book a meeting.
Written by
Mrudula Muralidharan
Finance Coach and Founder
Million goals
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