Updated: Mar 19, 2021
You must set long term goals and they must be achievable
In his blog ‘Is Setting Goals a Waste of Time’, James Adam talks about the importance of looking forward, about knowing the destination even if the journey is open to change. He talks about how he has achieved his goals in 2020 despite the mad nature of the year and whilst they have not come about as you would expect, it is by setting that forward vision that you achieve the things you want.
So let’s take that theme and imagine ourselves in 12 months and what would a great year look like, the nice feeling it gives you. Now, think about how we set goals towards achieving that lovely feeling.
Make It Achievable
The world is full of businesses that set far fetched and pointless targets for the year. There are many reasons for this, but mostly they are because people are trying to show ambition to senior people. This could be a board impressing investors, executives looking to show off to the board or a line manager looking to get his boss onside as he seeks a promotion.
These are all terrible reasons for setting goals for any business but are criminal in a small business where that sort of bravado will benefit no one. Instead, goals need to be based in reality and have to be closely linked to the vision of your business.
Link everything to your vision
If your goal is not linked to the vision of the business, if it won’t help take a step towards this, then you have to seriously question why it’s being put forward.
Whether a target is for the business overall or for a specific team or area of the business, you must always ask how it ultimately links back to the vision for the business. If I achieve this target or goal, what will that do for the business? Will it move you forward or will it just be something nice to say you’ve achieved.
Let me give you an example. I worked with a business that set a target of responding to every query within 15 minutes. It sounded great, but did it actually move the business forward? The argument put forward was that customers would be happier. Would they, I asked? Is a customer more likely to stay with your business if you respond in 14 minutes or 16 minutes? A better exercise was ensuring all customer queries were answered correctly and to the customers' satisfaction. That kept customers, not quick responses that didn’t give the customer what they wanted. (Note, for some business this might be the right answer, for others it is not — the metric must be right for YOUR business)
So don’t waste time on vanity metrics that don’t link to moving your business forward, always ask why they exist and their purpose.
Why reality is important
As a small business owner setting goals for your business, you are not tied to impressing anyone but yourself. This means it’s important to set achievements that will give you a personal boost during the year.
You need to challenge yourself and your business, so don’t put forward a target or goal you know you’ll achieve without trying. A goal is to push you and to give that sense of achievement, so make it feel like an achievement, but make sure it can be done, otherwise, you are creating demotivation for down the line.
As a guide, you should be striving to hit 80% of the goals you set. Much higher and you question if they were hard enough, start to drop below 50–60% and they start to have the opposite effect.
Also, don’t be afraid to evolve goals over time. Start by targeting 100 engaged followers, then set a new goal of 1,000 and build up your target. Annual targets are often set too far ahead and lack the motivation elements you need, so micro-goals that keep building and growing work well.
The Types of Goals to Set
Having understood why goal setting is important, why it needs to look forward and be achievable, what are the actual goals we should be setting ourselves as small business owners? Remember, these goals should be SMART — Specific, Measurable, Achievable, Relevant, Time-Based.
Here are a few ideas and how to set them.
I include this metric because it’s clearly important to all small businesses, but please be careful not to obsess overly with new customers and neglect the importance of existing customers (our next metric).
When measuring new customers, I would not recommend measuring the total number, but instead, focus on the amount these new customers are spending. This is definitely quality over quantity. Acquiring new customers is not cheap, so be sure those you do get are profitable and long term customers.
To set the actual target, look at what you’ve achieved in the last few years and compare that you what you anticipate spending on acquisition. For example, if you plan to spend similar, then historical numbers will tell you what to expect, however, if you are cutting back budget, then be realistic with the new customers you expect to get.
And remember, budget isn’t just financial, this could also be the time you are dedicating to something. If you are going to put a lot more time and effort into sales & marketing, then you should be targeting a higher return to justify that time, which as a small business owner is your more important asset.
Engage existing customers
Most studies agree it costs eight times as much to get a new customer as it does to acquire a new one. So it’s critical you put effort into engaging and increasing the spend from your existing customers.
You have a couple of key measures you can use.
Revenue generated from the same customers you had at the same time last year. For example, let’s say you had 1,000 active customers in January 2020 that spent £10,000 with you. Measure how much those 1,000 spend in January 2021. If you are engaging them well, then you can increase the amount from them.
Repeat purchasers. Over time, you should continually measure the number of customers that purchase more than once with you. For example, look at new customers acquired Oct-Dec 2020, then see what % of them have purchased a second time. Getting someone to purchase a second and then a third time is when long term loyalty kicks in.
People often set targets to have a higher proportion of total revenue from new customers, which makes no sense for your margin. Yes, if your revenues are not growing then it’s a problem, but what you really want to measure and see if increasing revenues and a high proportion coming from those existing customers, as they will provide you with greater long term profit, due to lower acquisition costs.
Conversion rate can actually be dictated by several factors, so always be really careful about how you judge it
A high level of new customers not yet familiar with your brand might decrease the conversion rate. We would always suggest measuring the conversion rate from new and repeat customers to look for trends that way
You should always be looking at testing changes to your website. But remember they will affect the conversion rate. Just monitor tests carefully and continually adjust them until you are getting the desired results — it won’t be perfect the first time, every time.
Price fluctuations and sales have a massive influence on conversion. We have seen customers react dramatically to conversion rates dropping, making changes to the site, then someone remembers afterwards that a year ago they had a huge sale on. Always keep a diary of factors that might affect conversions, like sales, product availability or technical issues, so you can compare accurately.
Also, remember there are many different ways to measure conversion rates. Some will base it on total traffic to the site that purchases, others will always split new from repeat customers. Some will look at conversion only from those that enter the sales funnel, for example looking at a product (rather than just looking at general content). Whichever method you use, ensure it’s consistent and if you can, look at a couple of measures, as each will give you slightly different information.
Never run out of content
This is quite a different goal to measure, but as a small business owner, it will really tell you if you’ve nailed the idea of how to produce content, which is so important to your marketing. By setting this as a goal you checking that you delivering new and engaging content on a regular basis, to keep existing customers happy and acquire new ones
We always advocate SMART goals, so how do we apply that principle to this type of goal? It’s easier than you think, the target you set yourself just needs to work within your business.
Here are a couple of examples of how you might set the target
Always have the following week planned, so every Friday before you finish you need to have all your content produced and scheduled for the following week. Measure that it is achieved and only ever miss that deadline 2 times over a year. If you want to be ambitious. always plan at least one week ahead
Measure the content hero ideas you have during the year. This is the core theme you will be producing content on. One measure is to never let that list drop below 10 during the year, so every Monday look at the unused ideas you have and measure that. The more you have, the better prepared you are and the less time wasted coming up with ideas
Growing a database is critical for any small business. It’s the best way of connecting with your audience, as you know your message is getting to them. With a lot of social media, only a small percentage of your audience will see your messages because however good you are, the algorithms will prevent everyone from seeing what you say.
But don’t fall for vanity metrics. Tracking the size of your email database and setting a target for its total size is a pointless exercise. Track a metric that will grow your business — those that are engaged with your output. Look to increase your open & click rates, focus on conversions from your emails and over the year look to have a larger active subscriber base, rather than worrying about the actual subscriber base size. Focus on those that count.
Social Media Followers
Exactly as with your database size, track a metric that matters to your business. So total followers are pointless, track the level of interactions you get. On Twitter, track retweets or quotes. On Facebook, look at the level of comments you are getting.
It’s about the metrics that show people are reading and interacting with your content. Having 10 billion followers that pay no attention to your content won’t generate sales. Having 1,000 people regularly interact with your content will make you money and that is the point of marketing after all!
Buy more lego
Ok, so this might be a slightly more personal goal but bear with us. We like to link achieving firsts for our business to buying a little piece of lego. For you, lego might mean a new pair of shoes, maybe a special bottle of wine — whatever it is that you personally like and consider a treat rather than an essential.
For a long time, I’ve always seen hitting micro-goals as a positive way to motivate individuals and as a small business owner myself, I do exactly the same with my business. I like linking it to achieve something new because that in itself gives you a lift.
For Thirty Three Percent, that might be launching our first-ever online course (which we recently did); it could be doing our first Facebook live; maybe we will target out first group mastermind session — the point is that you can adapt this for your business and each of these ‘firsts’ are also about driving your business forward.
It’s Not All About Revenue — Except It Is
I have deliberately not listed a revenue or even profit-based set of goals above, for two reasons. Firstly, I assume as a business you will have to do this anyway, particularly understanding what level of profit you need to achieve. Secondly, because ultimately every goal above gears towards driving your business forward, which links to making more money.
And let us be clear — it is more than ok to say your chief goal in your working life is to make money. So many times when we start working with people, they shy away from saying that.
They talk about enjoyment, about a work/life balance and about doing something meaningful. And all of those are important and certainly high on my priority list of why we created Thirty Three Percent, but you can want those AND like the idea of making more money.
In fact, I’d argue that be making more money, those other ambitions are easier to achieve. For example, the better business is, the more you are able to work with more meaningful causes. So set out clear goals, smash them and make 2021 the year of the small business.