Set Goals Now For 2006
 By Terry M. Blair

How’s your small business doing?

If that question stumps you, it’s time to slow down and take account.

Startup businesses need goals to provide focus and to measure progress. There simply is no other way to know if you’re winning, losing or treading water. The beginning of a new year is the perfect opportunity.

What kind of goals should you set?

For this answer, draw on your business plan. You projected income and cash flow before launching your business. Revisit those projections now. Have you met your projections? Were they too optimistic? Not optimistic enough? Are you satisfied in relation to those projections? Based on what you projected and how you’ve performed, recast your projections for the coming year.

You may want to employ yardsticks in addition to revenue. If you had not previously projected how many customers or clients you planned to attract, now is a good time to do that based on how many you have attracted to date. Measuring customer volume is a useful tool when evaluating projected and actual revenue.

Sometimes it’s possible for fewer customers to earn you more money, and sometimes just the opposite – more customers, but less revenue. By keeping tabs on revenue and customers you can spot such trends. You can also adjust to correct ill tendencies or to capitalize on pleasant surprises.

For example, you might find that a certain type of client is more profitable than another. But if you aren’t paying attention to both factors, you may never make the connection.

That brings up another factor worth measuring – differences within your customer base. Perhaps your goal was to generate $500 dollars each from type A and type B clients. But if tracking results show that you have generated $700 from type B clients and only $400 from type A customers, you can adjust your marketing to appeal to the more profitable niche.

These are things you won’t know unless you measure results periodically against projections. Not only do projections set goals, they can also become benchmarks for mid-course adjustments.

Don’t forget to include your marketing and advertising budgets among your goals. These expenditures can be tracked in relation to the revenue they generate, which is the best way to determine whether to cut back or spend more.

Tracking details such as revenue, marketing, the number of customers and their relationships may sound like tedious bookkeeping. And indeed, recordkeeping for recordkeeping’s sake is not time well spent.

So, what’s reasonable for you to track? How many goals are too many? How frequently should they be measured?

These are all subjective questions that not only fluctuate from business to business, but also require intimate knowledge of your business. Annual goals and annual reviews seem like a reasonable starting point, since your business no doubt operates on an annual calendar for tax purposes and probably budgeting too.

But if your business is highly seasonal, it might be wise to make projections and tally results on a seasonal basis. It would be good to know whether the holiday season’s advertising budget is wasted because your customers are away. Or perhaps you find out that the products you offered weren’t in demand this year. You can’t make such distinctions if your goals and measurements are done only annually.

As with all business decisions, goal-setting and the periodic reviews that make goal-setting meaningful should be reasonable activities that don’t drain you of limited resources, which includes your precious time. How do you know if you have set too many goals and if you are measuring too many details? You probably have too many if you haven’t time to follow up and measure them all.

Only if you’re familiar with your workload can you decide whether it’s worthwhile to measure goals monthly, quarterly, annually or at some other interval. Some goals like revenue, might be worth evaluating frequently. While others, like projected reach in a geographic market, might require only annual review.

Goals and the periodic review of them are valuable business tools for knowing where you’re headed, and whether you’ve arrived. But you’re the expert when it comes to your small business, or at least you better be. So, the details of how you put these valuable business tools to use will be a judgment you are best suited to make.

(Posted December 2005)

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