We will increase revenue by 10% next year. We will increase the average ticket sale by 15% this coming year.
How many times have you set goals like these for your business? How many times have you actually reached them, or even remembered you set them by the time Summer came around? If you’re like most small business owners, the answer is usually “rarely”.
So is setting goals bad? No they aren’t, it has more to do with the type of goals you are setting rather than setting goals themselves.
The problem with lofty goals
The problem is that a generic goal like “increase revenue by 10%” is too lofty and non-specific. If you’re a million dollar company, a 10% increase can add 100K in revenue….not too shabby. But HOW do you intend to add 100K of revenue to your business? That’s a pretty big number, there will need to be some innovative thinking in order to generate that much additional revenue over the course of the year.
Or will there?
Sidebar: An interesting video on goal setting
Bite sized chunks work best
The first problem with a goal like this is that the timeline involved is too expansive. Break the number into bite sized chunks to bring that lofty goal back to reality. $100,000 is a pretty big number, a number that is difficult to wrap your head around when trying to figure out how to generate that much additional revenue. But what about $8,334? That’s the increase in revenue you will need per month in order to reach your 100K goal. Better yet, what about $1923? That’s the increase in revenue per week you will need in order to reach your 100K goal.
Breaking down lofty numbers and timelines into more manageable chunks can help you realize that the goal is reachable. It also helps you start planning in much smaller time frames as opposed to thinking you have until the end of the fiscal year to reach your goal.
Once you have broken down your goal into something more tangible, you can start preparing the next stage of reaching your goals.
No results without action
A goal without a plan is just a wish. ~Antoine de Saint-Exupery
Setting a goal without a detailed action plan is a waste of everybody’s time. Now that you have broken down your goal into realistic chunks, you now need to do the same with your action steps.
Your action steps are the “how” you are going to reach your goals.
Your action steps need to be very clear and actionable (emphasize actionable) if you want to reach your goals. A common mistake many business owners make is laying out activities that are not action steps themselves, but outcomes. Outcomes are the results you get after completing your action steps.
Making two additional sales per week to hit your goal might sound like an action step, but it’s not, it’s an outcome from the results of your specific action steps.
The power of How
How am I going to reach my goal of increasing revenue by 10% next year? You might conclude that you will need to increase sales in order to generate the 100K in revenue to reach your goal. You determine that two additional sales per week will allow you to reach your goal.
How will I make two additional sales per week? You may determine that you will have to schedule an additional 8 product demos a week in order to generate 2 additional sales per week.
How will you generate an additional 8 product demos per week? Now we are getting somewhere! You determine that in order to generate an additional 8 product demos per week, you will have to:
- Call an additional 50 prospects per week to try and schedule a demo
- Reach out to past customers to reconnect and see if there are opportunities to offer a product demo to them
- Start a new Pay Per Click campaign to drive 200 targeted visitors a week to your website, with the hopes of scheduling 2-4 product demos per week from this channel
* You can now use the above action steps as metrics (along with revenue) to monitor your progress. You can make adjustments as needed if you are falling short of your goal.
An actionable plan has now been created
We have now taken a high level, lofty goal of “increase revenue by 10%, or 100K”, to broken it down into into bite-sized chunks that we can wrap our heads around. We have also determined what will help reach our goal (2 additional sales per week) and the detailed action steps involved in turning this into reality.
We are also working towards our goals within weekly/monthly time frames. You are now accountable every week/month for your efforts as opposed to once a year. This keeps everyone on their toes and the goal top of mind.
Now it’s time to work the plan
Now that you have a clear understanding of your goals, have broken it down into manageable chunks, and have detailed action steps to reach them…..it’s off to the races! You can make adjustments along the way, but you are now moving towards your goals. As Benjamin Franklin once said, “Well done is better than well said”.
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Gary Shouldis
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Gary,
This is a great article and I am happy to have found it. So often most articles encourage small business owners to fill out a full business plan. My experience in talking with small business owners is they need to go slow, try different things, test the idea, then develop a business plan. You advice is spot on.
Thanks.
PS we should connect, please feel free to contact me.
Will do Steve, thanks for checking out our article, glad you found it useful. Cheers
Hi Gary,
So true. Of course, there is a difference between dreaming big-always a good idea:)-and setting unattainable goals-always a bad idea and likely to stress out and demoralize you and your team. Thanks for sharing with the BizSugar community.
Thanks Heather, I def agree with thinking big, or else, what’s the point? I also think goals can be big, the important thing is to break that big goal down into manageable chunks and to create action oriented steps to get you there. Cheers!