My Secret Goal Setting Formula
Goal setting is an important exercise and is crucial to the success of any business, but is particularly important for entrepreneurs who can become distracted with multiple priorities. Goal setting allows us to be proactive, instead of just being reactive. We’ve all had days where we just seem to leap from one crisis to another, but we know that is not a preferred mode of operation! Goals direct actions, give you something to aim for, and can serve as a yardstick for measuring your business’s success.
However, goal setting itself isn’t enough. Goal setting is just the first step to achievement but you also need to have a goal setting strategy to help you accomplish the goal you have set. Without a goal setting strategy, or series of actions, that you are going to use to work towards the goal, whether or not you achieve the goal you have set is just a matter of blind chance. And in today’s business climate, blind chance is no way to run a successful business. To be successful, you need to make things happen, not just let things happen.
So when you are setting business goals, or any other goals for that matter, I use a goal setting formula that a mentor of my taught me that incorporates a strategy or strategies for accomplishing the goal:
“I will (goal + performance measure) by (specific actions).”
For example, suppose that you want to increase revenue. First specify the goal. “I will increase revenue this month by 25 percent. Setting a specific goal builds in the criteria you will use to evaluate your success. In this case, at the end of the month, you’ll either have increased sales by 25 percent compared to the previous month or you won’t. Then, specify the strategy that you will use to work towards accomplishing the goal. “I will increase sales this month by 25 percent by offering a 10 percent off sale on all inventory and advertising this sale in the local papers.”
When you go beyond the basic step of goal setting evaluating your success or failure is easy, because your goal is specific rather than general. And suddenly, instead of just having a goal that you may or may not achieve, you have a specific plan to follow and achieve the goal you have set.
If you avoid goal setting, here are a few tips:
Have Short-Term and Long-Term Goals
The first thing I do when setting goals is to consider where I would like to be 5 years from now. Once I have determined my long-term goal or ideal scene, I work backwards breaking this ideal scene down into short-term goals, specifying those milestones that need to be achieved along the way to this long-term goal. I picked this tip up from reading The Millionaire Course by Marc Allen. It is a wonderful book business book that stresses the importance of visualizing and goal setting.
If it seems to daunting a task to start with a 5 year plan, establish 90-day goals. Limit them to 3 specific things that you want to accomplish – such as a monetary goal, developing a brochure by a specific date, or obtaining a new client. Write out each goal and put a due date next to it. Then write out each step that needs to be taken, by when and what type of support I need to accomplish that goal. Then take out your calendar and schedule in the time you need to honor the commitment you just made to yourself.
Be Relevant
Goals should help you attain a specific aim. Beware of goals that are just going to keep you busy but do not contribute directly to the overall goal you have set for yourself and the success of your business. If you don’t believe your goals are worthwhile, you won’t make the necessary effort to achieve them. For example, a couple of years ago I really wanted to work a 4-day work week. I set the goal, but did not really believe that I could or should only work 4 days a week – guess what it never happened because I was not truly aligned with this goal.
Review Your Goals Constantly
Review your goals daily. Keep them in plain view – by your desk or next to your computer. Goals are not something that you write down and file in a drawer. The more you embody your goals, the more real they become and the more aware you are of opportunities that cross your path to help you achieve those goals.
I put my goals on colorful 4×6 index cards and keep them by my bedside. I read them over first thing each morning and then again before I go to sleep at night. This keeps me focused and moving towards my goals.
Staying on Track
Once you establish clear goals you will begin to notice that a lot of opportunities will begin to present themselves. When this happens, I ask myself a very important question which helps me to decide whether I should look further into the opportunity or let it go – “Does this opportunity bring me closer to my goal or further away from it?”
By asking yourself this simple question you will be able to take decisive action towards accomplishing your goals. For example, a lovely sales person from ADP has been calling me to schedule a meeting to show me their services and how they have changed. By asking myself - “Does this opportunity bring me closer to my goal or further away from it?” - I have no problem figuring out whether or not I should schedule the meeting.
Linda Hunt delivers simple, practical strategies for creating systems and structure that create stability helping business owners to grow their business and earn more money. For more FREE tips like these, visit her at http://www.sumsolutions.com
Maximizing Your Most Precious Resource
This month, I have been really frustrated – there just does not seem to be enough time in the day to get everything that I need to done. I was becoming irritable and burnt. Then it hit me! I was not maximizing my most precious resource – managing my time and I was allowing those “Time Vampires” back in.
A “Time Vampire” is anything or anyone that steals your time – a new employee, a talkative client, the telephone, your mother-in-law, broken office equipment, etc. Time is an irreplaceable resource and effective use of your time, more than any other habit, increases your productivity. While it is important to understand how much time you spend on activities that produce a result, it is equally important to identify ways in which your time is stolen from you.
Here are the 6 secrets I use to eliminate “Time Vampires” and maximize my productivity:
1. Create a Daily Routine. I actually do this by the week. I have an excel spreadsheet that lays out what I will work during the week and when. It includes everything from answering email to the time I will have lunch each day. I do this on broad terms. For example, Monday 10 AM to Noon bookkeeping.
I also schedule in two hour of unscheduled time just to handle those unexpected things that come up.
2. Plan Your Phone Calls. Plan your phone calls. Make a brief note of what you want to say and what you want to find out. It save time for everybody and makes for better communication.
3. Set “Do Not Disturb” Periods. Plan a definite time each day when you conduct a meeting with yourself!
4. Don’t Overcommit. Beware of overcommitment. Remember you are the only one who can protect your time. Learn how to politely say “no.”
5. Set Deadlines. Set reasonable deadlines for all jobs and stick to them. Available time always gets filled with something!
6. Think, Then Act. Avoid the “Shoot First, Ask Questions Later” phenomenon. Think first, then act. Nothing is so urgent that there is no time to consider the decision-making process.
Linda Hunt delivers simple, practical strategies for creating systems and structure that create stability helping business owners to grow their business and earn more money. For more FREE tips like these, visit her at http://www.sumsolutions.com
Setting your Credit Policy
The decision to extend credit to your customers is based on your company’s credit policy. Credit policy, you ask? Yes — credit policy. It doesn’t have to be formal, but it should be thought-out and in place when you need it.
A credit policy is the blueprint your company uses when deciding to extend credit to a customer. It outlines the methods (cash, check, credit card, etc.) under which your company accepts payment, the terms by which that money is due, to whom you will extend credit and how you will go about collecting payment from late-paying or nonpaying customers. With a credit policy that is neither too strict nor too lenient, you will ensure that your cash flow doesn’t suffer.
The primary goal of a credit policy is to avoid extending credit to customers who are unable to pay their accounts. Your credit policy has a direct effect on the cash flow of your business. A credit policy isn’t foolproof, of course: If you extend credit, chances are you are going to have customers who won’t pay you on time or even pay you at all. The only foolproof way to avoid bad debts is not to offer any credit. Since that isn’t practical for most businesses, you’ll have to do the next best thing — take reasonable precautions. A credit policy that is too strict will turn away potential customers, slow sales, and eventually lead to a decrease in the amount of cash inflows to your business. On the other hand, a credit policy that is too liberal will attract slow-paying, even nonpaying customers, increase your business’s average collection period for accounts receivable, and eventually lead to cash flow problems.
A good credit policy should help you attract and retain good customers without having a negative impact on your cash flow. To set up your credit policy, you’ll need to make three basic decisions:
- The types of credit you want to offer
- To whom credit should be offered
- The amount of credit you want to extend
The Types of Credit You Want to Offer
Industry standards are a great guideline toward helping you to determine which types of credit you offer. Here are some basic guidelines:
o Set your credit policy in relation to the cash flow needs of your business. Your policy should be set to ensure that you’re able to generate from your billings the level of cash that you need to operate your business on a weekly or monthly basis.
o Expect to achieve your ideal credit policy only through trial and error. You’ll inevitably make some errors about who is a good credit risk and who is not.
o Remember that your credit policy will change over time as your business needs change, as the economic conditions in your industry change and as the economic conditions in the country fluctuate. It’s good to reevaluate your policy periodically to determine whether or not it’s meeting your needs.
o Realize that the credit term you offer to a particular customer may change over time. If a customer begins to make late payments, you may have to reduce or eliminate the credit terms you offer that customer until they re-establish a good payment record with you.
To Whom Credit Should be Offered
When making this decision it’s important to take reasonable precautions when offering credit by gathering enough information on your customers to get a good idea as to whether they are a good credit risk. Credit information is generally easier to obtain for businesses than individuals because businesses often have more information publicly available.
The amount of information you collect should be in proportion to the amount of credit you intend to extend. Financial statements are a valuable source of information. They’ll tell you about the company’s cash flow and about the income the company is generating. Ask for current and prior year’s balance sheets and income statements. If the company cannot produce this information in a reasonable amount of time, that should raise a red flag that their recordkeeping might not be in order.
The Amount of Credit You Want to Extend
There aren’t any hard-and-fast rules for determining how much credit to extend to your customers, but here are a few general guidelines:
o Start with a small amount of credit and have your customers earn their way to higher limits
o Don’t assume that everyone is entitled to the same level of credit
o Reward your best customers with higher credit limits
o Don’t presume that larger companies are necessarily better than smaller companies at paying their bills
o Don’t hesitate to reduce a customer’s line of credit or shorten the terms if that customer begins to be late with its payments
Linda Hunt delivers simple, practical strategies for creating systems and structure that create stability helping business owners to grow their business and earn more money. For more FREE tips like these, visit her at http://www.sumsolutions.com
Price and Perception
Attaching a fair and accurate price to your products and services can be a tricky balancing act. It should come as no surprise that many business owners have an ongoing struggle with their pricing strategies.
Customers want the best value for their money. They will always do a quality comparison where possible, and make purchases based on the best price for the best value.
When setting prices, remember this golden rule: perception is everything. How customers view your product or service and what they are willing to pay for it is based upon those perceptions.
Your products will be perceived as high-, moderate-, or low-priced, usually compared to your competition or to your customer’s own notion about what "something like that should cost." There is no danger in having the price of your products perceived in any of these ways. It all depends on how you are perceived by your target market. For example, being known as "moderate-priced medical-care insurance provider" might make some customers nervous and think they are getting cut-rate service. The point is to match the perception of your price to the perceptions of your customers.
To further illustrate:
- If your customers are motivated by value consciousness and your product is generally available, price and value are important to your customer. Keep this in mind when setting your prices.
- If you sell luxury products that are exclusive to customers who value innovation, a perception of underpricing may actually work against you.
Pricing is all about knowing your customers – what they want, what motivates their purchases, and how they feel about the products, services and features they are purchasing. Ask yourself and even your customers the following questions to help determine how your products and services are being perceived. The answers may surprise you.
1. How do my customers perceive my product or service, in terms of price? In terms of value?
2. How does my price compare with my competitors’ pricing?
3. What values and benefits do my customers get from my product or service?
4. Are my prices consistent with those benefits and values?
5. What is the current supply-and-demand of my product or service?
6. Am I in an industry where the demand for my product or service has a short life cycle. Do I need to cash in quickly?
7. Do I have a product with a recognizable name that allows me the luxury of overpricing?
© 2009 Linda A. Hunt. Reprint rights granted to all online venues so long as it remains complete and unaltered (including the "about the author" info at the end). Send a courtesy copy of the reprint to info@lahenterprises.com.
Linda Hunt delivers simple, practical strategies for creating systems and structure that create stability helping business owners to grow their business and earn more money. For more FREE tips like these, visit her at http://www.sumsolutions.com
SUMSOLUTIONS Acquires The Bookkeeper's Referral Network!
I am pleased to announce that effective April 1, 2009 SUMSOLUTIONS has acquired The Bookkeeper’s Referral Network, Inc. (BRN)! SUMSOLUTIONS is fast becoming the resource for freelance accountants and bookkeepers looking for practical and simple tools, resources and programs to help you grow your practice and add value to your clients. BRN is the place where business meets great bookkeepers. So you can imagine how excited we are to be adding the services of BRN offers to our portfolio.
It has been a real pleasure working with Linda. She has helped me to see what area of my business is really my passion and focus my attention on that area.