You’ll notice an increase in gym and fitness advertisements at the end of December and throughout January. It’s obvious that businesses in the health and fitness industry are attempting to capitalize on the irrational behavior of people with New Year’s resolutions. While I encourage goal-setting and self-improvement, Forbes reports (in 2013) that out of the 40% of Americans that set New Year’s resolutions, only 8% of them actually succeed. Lack of success leads to disappointment and poor morale. Now, goal setting is important, but bordering audacity is not a good strategy.
Personal goal setting is relatable to business, as it is people who run businesses. I warn that the same irrational behavior in one’s personal life translates to business (and if there is one thing that psychology has taught us, it is that people are not rational.) Invigorated by the new year and a fresh look at life, entrepreneurs, too, set audacious goals for their businesses.
So how does a startup or small business leader create realistic goals?
Take a look at history.
First, look at what your business (or you) accomplished in the last 12 to 24 months. You must be objective about any goals that you are communicating to partners, investors, clients, employees, and customers, regardless of your enthusiasm. This is more than mere reflection of the past. If your company’s sales grew 25% last year, saying that you are tripling sales this year seems farfetched. If your app or digital service development reached its first version at the end of last year, setting a goal to have 100 buying corporate clients by the end of this year is very optimistic. The first thing anyone will ask is “how?” Without investing in some form, seeing growth skyrocket does not seem feasible –merely investing in handling capacity will be required. Corporate clients are typically risk averse when it comes to adapting to new technology, and are unlikely to invest in version one of new technology, unless it has been proven through case studies, referrals, or gone through proofs of concept (or is free.) Taking it further, setting a goal to triple sales after a year of sales decline is counterintuitive, since the first problem you must solve is how to stop the bleeding.
Set incremental goals.
Understanding what it takes to reach a goal will help you define the goal. What would it take to triple sales? Investment in marketing, product development, sales activity, and customer service will be required. Are the capital and resources available? If not scale down the goal. Regardless, set incremental goals. For example, if the goal is to have 50% revenue growth, coming into the year with 25%, set a benchmark of 30% in the first quarter, 45% in the second quarter, and so on, with an expected average of 50% over the year. It is possible to go from 25% to 50% sales growth within a quarter, yet it is important to consider how your business will scale.
Thinking strategically means planning five or more moves ahead. This can get complicated, but goal setting requires planning (the “how.”) After setting incremental goals and having a plan on how to manage resources, have a grasp on what decisions you will make if certain events occur. Taking the app or digital service example into account, say your Q1 incremental goal is to acquire five corporate clients. What do you do if the first three prospects tell you ‘no?’ How will you solicit feedback? What will you do with that feedback? It could lead to expediting the development of the next version you’ll offer on the market (although, ideally your developers are continuously developing the software.) Now if what about the opposite; you acquire five corporate clients in the first month alone. What are you going to do?
Get started. Set your goal and understand how you will get there. Need some help or want to move faster? Let us know –we can help.