The Power of Accountability - Achieving Your Business Goals

Running a small business is a challenging but rewarding endeavour. It’s easy to get caught up in the day-to-day operations and lose sight of the bigger picture. This is where accountability comes in. Being accountable means taking ownership of your goals and ensuring you follow through with your plans. For both business owners and their bookkeeping partners, accountability is essential for achieving financial freedom and business success.

Why Accountability Matters

Accountability isn't just a buzzword; it's a fundamental element of success. When you're accountable, you are more likely to:

Stay focused

Clear goals provide a roadmap, but accountability ensures you stay on the right path. It’s easy to get sidetracked, but knowing you're being held to account keeps you focused on your priorities.

Increase motivation

Regular check-ins and progress tracking keep you motivated and driven.

Improve performance

Accountability increases the likelihood of success, as it encourages you to do what you need to do and to keep on track.

Achieve better results

By staying committed, you can achieve better financial outcomes.

Make better decisions

Clear metrics and consistent monitoring provide the insights needed for better informed decision-making.

Accountability Methodologies

There are various methodologies you can use to improve accountability, many of which draw on best practices from management science:

SMART Goals

A classic method, setting goals that are Specific, Measurable, Achievable, Relevant, and Time-bound. This ensures you have a clear understanding of what you want to achieve and when.

Objectives and Key Results (OKRs)

This approach involves identifying a few major objectives and then defining a small number of key results (measures) for each one. This allows you to focus on what really matters. For example, you might have an objective to “improve profitability” with key results such as increasing gross profit margin by 5% and reducing direct costs by 3%.

Lean

This methodology encourages you to focus only on what's necessary68. In a small business, time and resources are scarce, so eliminate unnecessary tasks and focus on the core elements of your business to ensure progress.

Regular Tracking

Track your key performance indicators (KPIs) regularly2. This includes monitoring metrics for profit, cash, and growth. Make sure you understand what the numbers mean. For example, gross profit margin, net profit margin, and direct costs for profit; average debtor days, average creditor days, and short-term cash forecast for cash; income, number of invoices issued, and average value of invoices for growth.

The Power of "Why"

Regularly reflect on your core values and vision for your business. This can reignite motivation and remind you of what’s important.

Focus on the Goal Difference

Focus on how much you need to improve rather than just hitting a target. For example, rather than focusing on achieving a revenue goal of £12,000, focus on improving the revenue by £2,000 if you are £2,000 short of your goal2. This allows you to focus your efforts and keep things simple.

Accountability Partners

Sharing your goals with a mentor, advisor, business partner, or even a supportive friend can provide an external perspective and keep you on track. Regular check-ins with this partner can help you review your progress, discuss challenges, and adjust strategies as needed.

Regular Reviews and Adjustments

Set a regular schedule to review your financial progress and adjust your goals. Make time each month to look at the numbers, identify areas for improvement, and adapt your plan.

Visual Reminders

Write down your goals and display them in a prominent location. This constant reminder keeps your objectives at the forefront of your mind.

Celebrate Wins

It’s important to celebrate reaching smaller milestones along the way to maintain motivation and encourage continued effort.

Accountability in Action: A Generic Business Example

Let's say you own a small retail business. You might set the following goals using the above methodologies:

• SMART Goal: Increase monthly revenue by 10% within the next three months.
• OKR: Objective: Improve cash flow. Key Results: Reduce average debtor days from 45 to 30 and increase short term cash forecasts accuracy by 15%.
• Lean Principle: Eliminate any unnecessary expenses, such as low performing marketing activities.
• Tracking: Monitor your weekly sales, monthly expenses, and cash flow using accounting software and tools such as SME Clutch.
• Accountability: Meet with your bookkeeper each month to review the progress, discuss challenges, and develop solutions together.
• "Why": Reflect on the original vision for your business and your motivation to succeed.

How Profitable Path and SME Clutch Can Help

The Profitable Path provides the essential financial education to understand what goals to set and why they are important. The online course is designed to help small business owners learn how to manage their finances, set financial goals, and achieve financial security, focusing on the three key pillars of profit, cash, and growth. 

SME Clutch is the practical tool that helps business owners and bookkeepers stay accountable. It connects to your accounting software and retrieves 13 months of data to assist with goal setting and tracking. A single click updates your progress each month and enables you to share progress with your bookkeeper, accountant, and mentor. 

By using both tools together, small business owners and bookkeepers can set clear goals, track progress and maintain accountability. 

This powerful combination enables financial clarity, improves business performance and provides a clear path to success and financial freedom.