How do I reduce my body fat percentage?

I'm not sure what it is as i don't know how to work it out... But I'm 5ft 3in and 109lbs the last time I weighed myself. My goal weight is 105lbs but I feel as if this wouldn't get rid of all the fat as I'm still flabby and not toned at all. How do I reduce my body fat exercise wise and what do I eat? I have no idea!

Should I continue to try and lose weight or reduce my body fat?