CFC #004 - Set Better Financial Goals with the 4W1H MethodMay 27, 2023
Are you struggling to get the financial results you want from your services business?
Or maybe you’ve reached a milestone, but now you don’t know what to do next?
One cause of confusion I see in founder-led businesses is a lack of financial clarity.
Like Yogi Berra said: “You've got to be very careful if you don't know where you're going, because you might not get there.”
Conversely, once you’re clear on your business’s current financial location and desired destination, you can get the results you want a lot quicker and easier.
So today, I want to share a simple method you can use to gain clarity in your business by setting better goals.
I call it the 4W1H Method. The 4 W’s are What, Where, Why, and When. The 1 H is How.
Let’s dig in!
Gain financial clarity with the 4W1H Method
Many founders who are struggling to get the financial results they want lack clarity. This lack of clarity falls into 5 buckets:
- What - what do you want to happen?
- Where - where does your business stand today with resources and processes?
- Why - why do you want the results you think you want?
- When - when do you want to achieve your goals? when will you take action to make them happen?
- How - how will you know you’re making progress? how will you stay on track?
Here’s an example showing the 4W1H Method in action.
Recent Case Study
One of my service business clients was struggling to scale their business. They had doubled their revenues the prior year and had ambitious goals for the current year. But they were experiencing significant employee turnover.
This was causing my client and their team a lot of extra stress, worry, and frustration.
So, I helped them set clear, achievable goals with the 4W1H Method:
- What - They want to increase employee retention rates to drive revenue and profit growth.
- Where - We assessed their available resources and processes to determine realistic targets.
- Why - This goal would directly impact their revenue and profit growth by reducing recruitment and training costs, improving productivity and capacity, and fostering a positive work environment. Ultimately, this would enable them to build a stable team so they could feel comfortable working less. And it would also help them take home the money they needed to start traveling more.
- When - We set a deadline of 12 months. We review their progress regularly during our monthly CFO call.
- How - We track employee turnover rate. We aimed for a 50% reduction within 12 months. We also identified leading metrics (e.g. hours worked, employee satisfaction). And we measure revenue and profit growth alongside retention improvement.
As a result, they now have a clear target, a plan to reach it, and a process to help keep them on track. They still have work to do, but they feel less stressed and more confident about their likelihood of improving their situation.
Applying the 4W1H Method to set the right goals for your business is an important step in achieving sustained financial success.
But it’s part of a larger process to realizing the results you want.
I call this process Financial GPS.
We’ll dive into it next week. Stay tuned!
In the meantime, if you’re looking for more, there’s a couple ways I can help you:
1. Watch my free training on the 5 steps you'll need to take to get the financial results you want from your service business and feel less overwhelmed. Free training here.
2. I can help you get clear on where your business is today and create the strategic financial roadmap you'll need to discover your desired tomorrow. Book a free strategy session here.