How To Set Finance Team Objectives & Goals At A Startup (+Examples)
Your finance department is more than just an accounting department. With direction and time, they can help you achieve strategic goals.
The finance function is a strategic role. A startup finance team is responsible for driving revenue and controlling costs, either indirectly through analysis and guidance, or directly through process improvement. A key tool for having both a direct and indirect impact is good goal setting.
In this guide, we’ll walk through how you can:
- Set effective company goals
- Aligning finance team goals aligned to company objectives
- Use the SMART framework
- Leverage software to free up your team’s time
Set effective company goals
Setting effective company goals requires buy-in. Getting buy-in requires involving every decision maker in the goal-setting process, and balancing expectations. A good practice is to create two distinct plans to guide the conversation. A “top-down” plan represents what your investors and CXO’s believe the business can do, or what it needs to do. A “bottom-up” plan represents what your department leaders believe they can do, ideally based on data.
A good example of this is in the revenue planning process. The board and CEO may want to grow from $1M to $5M in revenue with $1M in sales and marketing spend. Your sales team may find they can only get to $5M by growing headcount and sales overhead beyond the planned expenses. Your marketing team may find that they cannot increase quality lead flow to support this revenue without dramatically increasing paid ad spend beyond planned spend. Armed with a top down and bottom up plan, you can lead a (hopefully) rational negotiation between teams based on the facts of the business, secure buy-in, and arrive at effective goals.
Aligning finance team goals to company objectives
Your finance team, especially FP&A, is filled with analytic minds that understand the big picture objectives of your business. They can and should be used to support the company’s critical objectives. You can do this by aligning your team’s goals to these broader objectives.
If we continue with the example of revenue targets - your CEO may get his cake and eat it too - a $5M revenue target and no increase in budget beyond $1M. Your finance team can help make this happen by sharing the same goal. Armed with financial information and insights, your team could help sales & marketing re-evaluate their budget to prioritize spending on growth. By regularly reviewing results with these teams, you can ensure they stay on budget and keep on track to hit their revenue targets. Even better, you can partner with them and be an advocate if the plan truly needs changing.
Set SMART goals
SMART is one of many conveniently arranged acronyms for goal-setting that can be used to set better goals. You can follow every detail listed by the Corporate Finance Institute, or just use the methodology as a sanity check. If we applied this framework to check if our goal of “hitting $5M revenue with $1M sales and marketing expense”:
- Specific: Maybe break the goal up into different sales or marketing channels if needed.
- Measurable: Yes, depending on how fast your financial close process is.
- Attainable: If you build a “bottom-up” plan to support this goal, this should already be done. I.e. reallocate $200k of content spend in Q1 towards paid campaigns to boost sales pipelines for the rest of the year.
- Realistic: Same as above.
- Timely: I’d set an annual goal with quarterly and monthly targets
Do less, and get more done with the right software
You need time to do strategic work, and you can’t simply grow overhead headcount. You need to invest in software to automate repetitive tasks that bog your finance team down. Software can automate many functions and enable finance professionals to focus on strategic decisions about the company's finances that a computer can't replace.
You can implement spend management software to automate bookkeeping and reduce time spent on the close significantly. Your team can focus on real-time decision-making to improve financial management and financial reporting, rather than sorting through expense reports.
The bottom line: Your team can help the company achieve its goals, they just need direction, and time.
Your finance department is more than just an accounting department here to track cash flow and build financial statements. Your team members can be strategic advisors, available to support company objectives with financial analysis. Give them direction with achievable and well aligned goals. Give them time by investing in software to automate mundane tasks.