Set Sane Financial Goals
Copyright (c) 2007 Audrey Burton
Setting unreasonable financial goals for your business can
make you crazy! You may think you are motivating yourself
to achieve more by setting your expectations high, but the
opposite is often true.
Big businesses have systems and algorithms for projecting
their financial goals, and so should you. Yours can be
much less sophisticated and complicated and can yield the
same result.
When your business is new, setting your goals is kind-of a
shot in the dark. Unless you have some data on which to
base your projections, you will most likely be estimating.
Talk to people in your same industry to find out what they
earned in their first years, keeping in mind how your
business differs from theirs.
Otherwise, here are some exercises you can do to get a
reasonable number. Start by writing down your gross sales
for every month for the past 2 years. (You have just
created a spreadsheet.) Now go do something else – have
lunch, go to a meeting, sleep on it. When you come back to
it, look at the numbers.
Your numbers will tell a story. Are there any trends? Is
there seasonality to your business? How did you do last
year vs year ago? How did you do against previous
projections?
Next, add your monthly totals into quarterly totals (Jan –
Mar, Apr – Jun, etc.). Look at your numbers again. What's
the story? By putting your numbers into quarterly totals,
you eliminate most anomalies.
Once you understand these numbers, you should be able to
set reasonable, achievable financial goals for your
business. Take a look at last year's quarterly and annual
totals vs the year before. Is your business growing
steadily? This answer will help you finalize your annual
number for the coming year.
One more way in which you can use your revenue analysis is
to help create your marketing plan for the coming year.
Go back to your spreadsheet. Are there any particularly
good months? Investigate why those months were so great.
What marketing strategies and/or tactics led to those
increased revenues? In addition, how are your sales
trending over-all? If you are increasing your sales over
time consistently, you are doing something right. What,
exactly, are you doing?
The answers to the preceding questions will get you started
on your marketing plan. Compare your strategies to see
which are most effectively bringing in more sales, and do
more of that!
