Now we are approaching towards the beginning to new financial year. While working with lots of clients I have seen frequently that the small and medium enterprises generally do not set their goals. There are different reasons to it. These reasons like:
They don’t know how to set the goals
They don’t know the importance of goal setting
They are disappointed, as they do not achieve their goals
They do not have enough time to set goals
They do not know how to build Action Plan for achieve the goals.
When we work with clients, we work with a clear objective of scaling up their sales revenue. Therefore, setting the revenue goal becomes the first imperative. So one of the question lots of sales people and business owners ask is; how to set the business goals?
Yes, setting business goals is very scientific process. Lots of business honors just look at the previous year and decide on some comfortable figure for next year think that it is their goal for next year. In case of SME businesses, most of the time deep, logical and analytical thinking does not go into goal setting.
Surely, this is not the right way of setting goal. Setting up of business goal is a three-step process. Let me explain you all the three steps.
Reflection: Business owner must reflect upon the past 3 years and look at the average growth per year. And accordingly decide the goal for the next year. This type of goal setting is also known as the limitation goal setting. Because you have limited yourself with your past progress and experience. For example, if your business has logged 15 percent average growth, year on year during last three years, you can simply add 15% to the previous year’s revenue and setup the next year goal. Based on this formula if last year’s achievement was 100Cr the next year’s target can safely be 115Cr. But this is ignoring the market conditions, Technical innovation or any other opportunity which may knocking at your door. Therefore the second step is recommended to set the sales goals.
Opportunity Exploration: After you have reflected upon the previous years and set up the reflection goals, the leadership team need to explore the opportunity available in the market. You need to explore the market conditions in the country related to your industry and in general. You can also look at your competitors. Try and find out the competitors’ strategy and learn something which can be implemented in your business. Also explore the new streams of revenue which you can add. Locate the new technology which may be available in the market and analyze how you can take advantage of that for generating new business. Add the opportunity component to your reflection goal. For example, you can add 5% revenue due to the new technology you have added in the recent past. Which means now after adding the opportunity component your target for next year shall be 120Cr.
Vision Alignment: This is the time to look at your 5 years vision. Is your growth going in the direction of your vision. If not, you can add few points to your goal arrived by step number 1 and 2. For example now after adding the vision component your goal shall become 125Cr.
The goal decided by you must be stretched. But at the same time, it should appear to be achievable.