4 YEARS IN BUSINESS
Welcome to 2018. I want to start the year by talking about Goals. Oh shit, here we go…
Over the last few weeks we have all done this in some way or another. Maybe we have openly talked with family and friends about our New Year’s Resolutions, written them down, put them in an App or maybe we have just thought about these and kept them private. Either way we all go a bit Goal crazy at this time of year. Maybe it’s the great weather or just too much festive spirit, but we all do it.
This Christmas I was lucky enough to be given an awesome, varied summer reading selection (thank you Jane and thankyou Kelly) and have had plenty of time and enough great weather to really get stuck in. In fact I have read more during this Christmas break than I have over the last 2 years combined.
Reading is one of my favourite things to do. I love it and always have. But as a business owner or even as a person living in our modern age, there never seems to be enough time to do it.
So I’m putting it out there. A few of my goals for 2018 are to be more responsive to requests (you can all hold me accountable to that one). Lose weight because I am definitely NOT bikini body ready (have I ever been?) and the third is to make time to read more.
So as you have all reflected on your goals, resolutions, targets or whatever you want to call them for 2018, I have done the same. I have defined my goals for PTAM for 2018, written them down and developed a plan to make 2018 an even better year than 2017. And yes, reading more, amongst other personal goals is a high priority.
But why is it that goals are often really exciting to make, but so difficult to actually achieve? Why do we abandon them so quickly? Why is it that we retreat back to the safety of normal behaviours and just say stuff like, “It’s not the right time” or “I’ll do that one next year”. I guess there are a number of reasons but in my experience, it’s because the goals we set just are just too open ended and not well defined.
An example of a goal that is too open ended is “In 2018 I will read more”. Ask me how I went with this in January next year and the answer will probably be “I don’t really know.”
For any goal, whether it be a business goal or a personal goal, for it to be truly effective it needs to be well defined. Otherwise it is just a statement or wishful thinking.
Well defined goals will no doubt help you form your strategies and set your milestones for the year, help you direct your time and resources, and in the end, lead you to the results you hoped to achieve when you first set them.
“The value of goals is not in the future they describe, but the change in perception of reality they foster, in the present”. – David Allen
So what are the key elements for effective goals? They should be Clear, Relevant, Achievable, Measurable and Timely
It’s very easy to say things like “In 2018, we are going to increase the business revenue,” or “We are going to win more contracts.”
Hey these are great things to do! More revenue and more contracts, most businesses would love to have these things in 2018 and hopefully you will. But they’re not clear enough because how do you know when you have achieved these? What number represents an acceptable increase in revenue or an ideal increase in customer contracts? Such statements are too open ended.
Perhaps a clearer, more defined version of these goals could be; “We are going to increase the business revenue by 20 percent compared to last year” or “my revenue for 2018 is going to be $1,000,000” or “I’m going to increase my customer contracts by 2 every month.”
One of the keys here is to make sure that in addition to being clear, the numbers are relevant to your current business performance and position. For example, if your current revenue is $800,000 and you have budgeted for a monthly increase of $20,000, then it is reasonable to set a goal of achieving $1,000,000 revenue over the next 12 months. It might be difficult, but it is not an impossible goal to achieve. On the other hand, if you are budgeting for only $1,000 growth per month then achieving this goal, despite its clarity, is unrealistic.
When a goal is clearly defined, you know exactly what success looks like and how to measure it.
There is one very useful question you can ask yourself for each of your business goals to determine just how relevant it truly is.
That question is “why is this a goal we should pursue?”
Say we had a business goal to increase our Instagram followers. We really need to consider why we want to do this? Why do we want to allocate time, effort and financial resources into this strategy?
Is it: “Because we want to be known by the general public more than our competitors.” Or “Because I like spending time on Instagram.” Both of these may be true but how relevant are they to the overall business strategy?
Perhaps more relevance could be gained by saying: “Because I want to increase my business’s profile and promote our services on Social Media.” or “Many of my ideal clients use Social Media so increasing our Instagram followers means our message, products and services will be promoted directly to our ideal markets.”
These statements now seem like more strategic and business focused reasons to pursue an increase Instagram followers as a goal.
It is important in business to challenge yourself, but don’t set yourself up to fail by creating goals which are so out of reach, you have no hope of achieving them.
For example, your long term goal might be to become a multi million dollar business with numerous locations around Australia, but will that happen in 2018? Is it even possible to achieve that within your industry at all?
Sometimes knowing what is achievable can be difficult when your business is still new and you don’t have a history on which to compare.
However, spend time researching your industry and completing a Business Plan. This plan should include a SWOT analysis where you focus on your current Strengths, Weaknesses, Opportunities, and Threats. The more advanced your research and Business Plan, the more you can use it to guide your decision making and therefore the more accurate and achievable your goal setting is likely to be.
At PTAM I have implemented numerous BHAGs. What is a BHAG? A BHAG is a Big Hairy Audacious Goal. It is the goal of goals, the big cheese, the grand daddy, the scary one etc. This is the goal that seems almost too far out or reach but if achieved would be sensational. So as an example, for a business to increase it’s revenue by 20% in 2018 could be an achievable goal whereas a 50% increase could possibly be too much of a stretch and therefore, a BHAG. It is worth noting that the most innovative companies are often the ones that set the biggest goals.
Perhaps a combination of more realistic goals which you feel confident can be achieved, as well as some more challenging BHAG type goals that will push you to be innovative and focused, will provide the ideal mix of goals for 2018.
There is no point in setting goals if you’re not able to track your progress and review your results. If you’ve made your goals very clear, then you’ll already have defined some obvious measures, but the greater skill comes in identifying the not so obvious hurdles.
Let’s look at one of our examples again:
Goal: Increase customer contracts by 2 every month.
Measure: The number of contracts you have.
So here we have a clear goal and an obvious measure. This measure will tell you if you have hit your goal or not. We either got 2 contracts this month or we didn’t.
However, you can also set smaller milestones which will allow the progress to be tracked. For example, how many leads are we currently working on? How often are we engaging with these leads? How are we converting these leads into contracts. The strategy can be modified to ensure you’re heading in the right direction rather than waiting for it to develop organically. If we are not even engaging with our leads, how can we possibly expect to be converting these into contracts at the rate of 2 per month?
Another advantage of setting measurable goals is that it keeps us focused on measuring the right things and stops us from becoming distracted with things that are not aligned with the business plan. These often have very little to do with our actual business goals.
Finally, when it comes to setting measurable goals, you need to know how to measure them. Make sure you have tools in place before you try to achieve the goal. For example, if your goal is to keep monthly costs below the budgeted amounts, the tool may be having a monthly budget in Xero. This predetermined budget will allow you to view your data quickly and easily. It is not efficient to manually calculate a new budget each month just to see if you made the budget or not.
Once you know what goals you want to achieve, how you’re going to measure them and why they’re important to your business, you still need a timeline. For example, take the goal of increasing the business revenue by 20% on last year. Will this be achieved by June 2018 or by December 2018? The 6 month differential could make all the difference between success or falling short.
Obviously, a timeline by which to measure success is essential. Not only does adding a timeline make your goals clearer and more easily measured, but it also helps when it comes to developing your strategy, allocating your resources and planning your time.
Goals need timelines, but they also need milestones. Setting milestones will allow you monitor your progress and review your strategy where necessary.
What is your next action?
Now that you have set your business goals, what happens next is up to you. You can always find a reason to abandon them, there are plenty. Or, you can use them to make 2018 the best business year it can be. That’s what goals are meant for. The next challenge is to work out how you are going to do it. You know what you want to do, why you want to do it, how you are going to measure its success and when you are going to do it by. Now it’s time to set your milestones.
What are your goals for the year?
It might be to increase profit by 20%. It might be to reduce debtor days by 10%. It might be better record keeping. It might be to have more time with the family. It might be to make an investment. These are all things that Team PTAM can help you with. If you think we can, then Join the conversation…