Key points:
- Be realistic with your goals
- Break your ambitions into short-term, achievable, segments
- Carry out regular reviews of your short- and medium-term targets
- Be flexible – have contingency for challenging scenarios, but don’t be afraid to take advantage of opportunities
The process of setting long-term goals forces entrepreneurs to think about what they want from their business, while hitting short-term targets confirms to them what their business is capable of and helps them plan better for the future.
Have clear ambitions
Steve Fry, who launched his own sport-and-talent management, media and PR agency, M2 Sports Management, more than a year ago, says: “You can’t go into business without a clear vision of where you want to get to.”
It’s important to set an ambitious goal, such as building a business with £5m annual turnover within ten years. But Fry warns that an audacious target can scare people and look unobtainable. “You’ve got to break your ten-year goal down and ask yourself what a £5m business looks like,” he says. “How many customers do I need to have in ten years time and how many do I need now and next month to meet that goal? How many doors do I have to knock on today and how many of those calls do I need to convert on a daily and weekly basis?”
Breaking a big, long-term goal down into smaller short-term targets helps make an ambitious goal seem more realisable. Furthermore, Fry says, meeting short-term goals gives you confidence and helps drive momentum. It’s a crucial part of the lifecycle of any small business.
Be realistic
Sales forecasts, however, should be based on accurate, current information and educated projections.
Code Promotional Merchandise Ltd has been in business for more than two years. When it comes to setting targets, Ian Feingold, Director at Code, says that the first rule is to be realistic. “It is better to set conservative short-term goals that you can meet rather than flogging yourself to fail,” he says. “If you start by reaching attainable goals in the first couple of months you can aim for larger ones thereafter.”
Make sure that the plan reflects seasonal factors. “You can’t expect sales figures to remain flat across the year, so you need to anticipate the peaks and troughs,” Ian explains. “Some months will be better than the average, some will be worse.”
Regular reviews of your business plan and targets will help you adjust your mid-term goals more accurately. This will also leave you better placed to react when circumstances change.
Both Feingold and Fry agree that being flexible is important, and that goals need to change with market conditions. This is essential to safeguarding the health of the business when times are tough but also for getting ahead when opportunity knocks.
“Don’t be too fixed in your thinking for budgeting,” Ian says. “If a great opportunity comes up, make an educated decision and be prepared to be adaptable with your finances in order to take advantage of that chance.”
