I am amazed by the number of small businesses that don’t set sales goals. Almost every corporation that I have ever work with or worked for has been able to tell their managers and workers what they should be producing down to the minute. Not only does this increase efficiency and increase the probability that the company will be profitable but it also keeps the workers focused on their duties.
You go to work for Company A selling widgets. Your boss doesn’t tell you how many widgets to sell but encourages you to do your best everyday. You average selling ten widgets per day and feel like you are doing a great job. However, you nor the manager realize that you need to be selling fifteen widgets per day to achieve profitability. If you knew that five more widgets would impact the company’s bottom line, I feel assured that you would probably try to sell the additional products.
Not having sales goals for your business puts you in the scenario described above. You could be doing great, in your eyes, but is your business profitable? Having a budget for your expenses and sales goals for your projected revenue will not guarantee you business success but it will put you in a position to achieve your goals. Failure to plan is planning to fail.
So… where do you start with setting your goals? Begin with the end in mind (yes, I am full of clichés today). Last week, we discussed Budgeting for Business Success and I provided you with the main expense categories that your business should track. You should have taken those categories, listed them in a column of an Excel spreadsheet and then estimated the monthly figure in each category for the next 12 months. At the end of each column, you should total those expenses. This is the amount of money that your business needs to make each month in order to stay out of the red.
You can take that number and the average cost per sale that your business generates to establish monthly, weekly, daily and even hourly sales goals.
- Monthly: take your expenses and divide by the average cost per sale; this is the number of sales that you need each month
- Weekly: take your monthly number and divide by 4
- Daily: take your weekly number and divide by the number of days that you are open for business
- Hourly: take your daily and divide by the number of hours that you open that day
Based on these numbers, is your company on track to achieve profitability? Obviously, this is a very simplistic method of computing sales goals. As you notice trends in your business, you will be able to adjust for your busier/slower hours, days, weeks and months, however, you have to start somewhere.
If you want to discuss your business sales goals and creating a budget, email me for a complimentary one-hour business consultation ~ email@example.com.