Setting goals can be fun, especially if someone else is responsible for achieving them. For most small business owners, myself included, the pressure and responsibility for achieving revenue goals rests heavily on the business owner. When faced with this pressure, we can either:
- Set a vague goal (so it’s hard to evaluate whether we hit it),
- Set a lower goal (so it’s not too risky), or
- Set a specific, measurable goal based on solid assumptions (so it’s easy to monitor and adjust if we get off track)
The pressure is real. There’s a lot riding on whether you hit your sales goals– Important things like your people, profitability, and personal effectiveness.
Setting vague or unlofty goals might relieve a bit of pressure, but it still won’t get you where you’re trying to go. It won’t allow you to grow yourself, your team, or the impact of the work you do in your business.
Creating a specific, measurable revenue goal and then working hard to execute strategies to achieve that goal is one of the biggest contributions you can make to your business. Here’s how:
Get clear about the specifics of your revenue goal. Avoid vague language. Remember – you need to be able to tell whether you’ve hit the goal.
- Increase average revenue per customer by 20% by the end of the fiscal year
- Increase total revenue by 15% by the end of the fiscal year
- Increase units sold by 10% quarter over quarter
- Add net new revenue of $1 million by the end of the fiscal year
Determine the key assumptions that go into your sales goal. Use historical data from your own business and industry benchmarks.
- Number of leads
- Customer acquisition/win rate
- Price changes on existing products/services
- Pricing on new products/services
- Sales mix
- Customer attrition rate
- Production capacity
Do the math. You don’t have to get fancy; a simple spreadsheet will do. Calculate the results of your assumptions and then evaluate whether they are appropriately risky or downright ridiculous. You may have to go through a few iterations before you land on the final goal and related assumptions and calculations.
Goal achievement expert and bestselling author, Michael Hyatt says, “A goal well-conceived is a goal half achieved.” So, take some time now to articulate your revenue goal, speculate what assumptions are needed, and then calculate the results. You’ll be half-way there! Then, you and your team can get to work creating and executing specific strategies to achieve your goals.
Courtney DeRonde is a CPA and Managing Partner of TDT CPAs and Advisors. Courtney and the TDT team help overwhelmed, successful small business and nonprofit leaders achieve better results and move their organization to the next level. She’s also responsible for TDT’s revenue goal. So, she has firsthand experience setting and achieving specific, measurable, and appropriately risky revenue goals.