I don’t think so, I haven’t come across one yet which has.
In all walks of life we have targets. Many of us have a target weight, some of us have a target of that dream house or a fantasy holiday next year or we have financial targets such as how much we would like in our savings fund or how much we would like to earn.
What do we base these targets on?
In general my research has shown that the majority of people base targets somewhere between what they believe to be achievable and what they really aspire to. We are all different, some of us will always shoot very high and constantly strive to overachieve whilst others focus on having realistic goals and aims and then they ensure they hit before reviewing and resetting. Are these the principals to base financial business targets on? Does a business have to be dictated by financial targets alone?
I did some work with a business which actually hit every sales target for 18 months on the bounce, yet that business failed. They had the margins wrong, they had the sales people incentived wrong so a lot of the business brought in was all wrong for them to deliver.
Setting targets for business growth is a complex challenge at times and not one that I can offer all the answers on in a simple blog, but I can offer my five top tips which I think need to be strongly considered during the process of setting a target.
1. What is the business trying to achieve? It is essential that your know what you want to achieve and that hitting your targets would enable you to do that.
2. What is your average cost of sale? You need to know this. If your sales resource costs 45K a year and you work on 10% margins, then the target needs to be a minimum of 500K. Consider setting margin based targets as an alternative.
3. How big is your market and the average deal size? This may sound like logic but you would be amazed. If your average deal is 5K and there are only 40 potential clients in your area, your target can’t be above 200K.
4. How often will you review progress against targets? This is a whole other blog, but accurate pipeline management is essential
5. What other factors are you going to take into account, other than the financial? It is important to keep your sales resource focused and motivated (even if that is you!) and there will be times where closing the deals becomes tough. Have more than just financial or revenue based targets in place wherever possible.
At The Growth Academy (www.thegrowthacademy.com) we work very closely with our clients to ensure that they have targets in place which are realistic, sustainable and appropriate to their short-term and long term goals and we make sure they hit them.
We have a module available to our clients and newsletter followers on how to best approach target setting in more detail.
Comments are welcome as always and if you found this post useful you may also find reading the following posts beneficial