Balancing Financial Performance Objectives — Jason Feintuch
Financial performance is a critical component of an organization as it not only tells investors how the business is doing but also sheds some light on the performance of the management and if the profits and operations are on track.
While businesses pay a lot of attention to financial performance, they tend to forget that setting financial performance objectives is equally as vital as they are the foundation for improving the performance of the business. Goals help with planning and tracking, ensuring the objectives are met within the provided timeframe.
For a business to achieve its financial performance objectives, they also have to balance other business areas.
To drive good long-term financial performance, it is imperative to set SMART objectives. The objectives should then guide your organization in developing a strategic plan to help you achieve them. Leading indicators should also feature to measure performance and indicate when corrective actions need to be taken.
Financial Performance Objectives
Some of the financial performance objectives you can set for your business include increasing venue, decreasing costs, and increasing profits. These objectives should be specific, measurable, achievable, realistic, and timebound.
KPIs and initiatives should therefore accompany them. These KPIs should have timelines to make it possible to measure the progress over time.
The Balanced Scorecard Framework (BSF) would be the best for managing your financial performance objectives. The framework connects the dots between the goals, KPIs, and initiatives or action plans.
For instance, if the objective is increasing profits, the KPI can be achieving $700,000 in profits per quarter. The initiatives could be hiring a sales team or monetizing some of the organization’s projects.
The progress of the KPIs can then be reviewed after every quarter. This way, the business can tell if the initiatives or action plan is working or needs reviewing.
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