What seemed like a solid plan at the start of the year or quarter can seem a distant ideal after a month or two. Especially as those new opportunities inevitably come your way.
It can be easy to abandon well intentioned plans and get off track without even realising it’s happening.
And there’s always a financial implication.
You can only spend cash once, and in most companies there isn’t enough cash to do whatever you want all at once.
So, whatever you’ve got going on, your underlying financial priorities need to remain a constant. So whatever choices you make, they’re consistent with your financial strategy, and any new plans, distractions or opportunities don’t go against what you’ve decided.
Decide what you want
You need to get super clear on what you actually want to happen. What do you want to be true at the end of the quarter or year? What actually are your real priorities?
Yes, this takes some thought, and to be honest many people just don’t know what they’re aiming for.
Here are some things you might consider:
- Making sure all your VAT and corporation tax is put away
- Building your buffer cash – at least 3 months overheads in a separate account
- Deciding your profit target for the year
- Focussing on certain key metrics that drive the value of your business
- Putting enough into your pension
- Earning what you want to
- Extra dividends to pay for something special at home
- Staff in your business needing pay rises
- Paying down debt
- Investing in people or equipment etc
- Building investment cash for growing the business
- Putting money into personal investments
Sort them into a priority order
Once you know what you want, sort them into a priority order. This is massively powerful as you know then where to focus your attention first.
The Accept / Reject decision
When you know what you want, and what is most important to you, you can assess new opportunities against them to see if they’re likely to help you achieve them or not.
And when a new opportunity comes along that you really feel you want to do, just check your list – does it mean delaying something you’d decided was a priority?
Do I want it, or need it?
Say you don’t have your taxes put away yet and you’ve agreed this is number one priority, followed by building buffer cash so you don’t have to worry about cashflow anymore.
Then the idea of an expensive holiday pops into your head.
Is the holiday is going to scupper your plan to save your taxes for a few more months?
What other things on your list will be pushed back?
And did the holiday even make it onto the priority list in the first place?
It answers in advance “what should I be doing next”
A client I saw last week is restructuring their business. As the ground shifts beneath them they found it really comforting to decide the order of their financial priorities, so they know where to turn their attention, what to focus on next and to take those dizzying decisions out of their head.
It takes away the turmoil of choice and indecision, wasting all that energy wondering if you’re doing the right thing. And inevitably you’ll end up in a much stronger financial position. (I’m assuming here that you’d make sensible decisions about your priorities!)