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At JP Rata, we’re not like traditional accountants. We’re a partner in growing your business. We feel this is more important now than ever during the coronavirus pandemic.
One way that we help our clients to grow is by encouraging them to set goals. To create targets that their whole team can aim for, which gives you and your team an increased sense of purpose and direction every day. In theory, making it more likely that you will succeed.
But how do you do that in a time of heightened uncertainty? The Covid-19 situation has thrown the world into a state of flux and I know from my conversations with clients that the business world is feeling this just as much as we are feeling it in our personal lives.
How do you plan for your business and set goals when you don’t know whether you will have any customers next month. And who knows what will come next? I’ve been speaking to restaurant owners this week who are struggling immensely from this; the government are promoting a scheme that encourages us to eat out at the same time as warning the nation of an imminent ‘second wave’.
It’s harder to set targets in times of uncertainty. It’s easy to shy away from setting goals for your business when your situation and business environment are unpredictable. Maybe you are struggling to find the time to sit down with your figures as your business is so busy right now. I think now, more than ever, it’s even more important to set targets. When you can’t simply look at last year’s figures and build from there, you have to challenge yourself to find new ways to set targets.
Under normal circumstances, to set goals we ask:
- what you want to get from the business?
- how you want it to grow?
- What have you achieved before?
- What hasn’t worked so well in the past?
When having this conversation with clients, I like to keep the discussion as open as possible, considering as many different perspectives as I can. But inevitably we talk about profit, about how much the owners want to take from the business. And naturally the conversation then moves on to sales.
Sales targets are useful, because having an idea of how much you can sell helps you to make important decisions about what premises you need, about advertising, about staffing. These decisions are all much harder when you have no idea how busy you are going to be.
When our country was locked down, one of the first things out of the window was my sales target. It became redundant overnight when the government announced that they wanted us all to stay at home. We immediately had to take a different approach and so I replaced my sales target with a goal to speak with every client and see how we could help them manage through the lockdown. This change was necessary and I am proud of how well the team responded, quickly setting their sights on our new focus. It helped us to prepare for the coming storm.
With the grants that were announced, we could absolutely focus on customer service. This was a big relief for me, because our customers had a lot on their mind and it felt important to help them rather than having to focus on new business. However, to keep our business strong, we will have to keep selling.
So, to survive, I need to reintroduce sales targets. And this got me thinking: I think we all need to. The most valuable target is one that is SMART. That is:
- Specific
- Measurable
- Achievable
- Realistic
- Time bound
But how can we set sales targets that are achievable and realistic when the future is so difficult to predict?
To get a feel for what is achievable and realistic, I would normally start with a comparison. For example, how did we do last month, or last year? These are still good figures to know. But they won’t be enough to predict my sales for the rest of 2020 and the same can probably be said for you and your business.
Consumer habits have been changing constantly this year, in very sudden and dramatic ways. They are changing based on factors that are completely out of our control. Consumers are balancing fears for their health and a desire to return to normal; their drive to spend money supporting local business and their fear of being made redundant. And all the time, the government are introducing new guidelines on socialising, or financial schemes to support the economy. As helpful as some of government intervention has been, it has certainly made things more difficult to predict.
Here’s an example: A client called me at the end of June. They were very excited to tell me that their forward order book had bounced back and they now had more work booked in than ever. Their business is property construction and they were very keen to get through the work over the summer, before the winter weather makes everything tricky. So, jobs were lined up to start immediately, parts ordered and staff assigned. Then the government announced that they are working on an initiative to support green property investment. All of this week’s customers have cancelled or delayed while they wait for more details from government on what the scheme will cover. Although this initiative might encourage custom in the future, it has destroyed July’s sales and will put further strain on a business that was hopeful about bouncing back quickly.
I am not writing this to complain about government initiatives. It shows that, like it or not, they can have an immediate impact on our ability to make money.
So, if I put aside last year’s results, how else can I come up with a realistic sales target?
It needs to consider our previous results but also be suitable in this year and a market impacted by coronavirus, when our main focus is survival.
So how much would you need to sell in order to survive? This is a very important question. It can help you to make difficult decisions about staffing and – ultimately – about whether to close the doors for good. For many people, this figure will be a grey area for them. Most prefer to focus on growth and striving for success rather than vulnerability and the possibility of failure.
We now have two comparisons:
- How much do we need to sell to survive this month?
- How much did we sell last year?
I asked a client to help me answer the question “how do I set a sales target at the moment?”. Their answer was that not only did they need to cover upcoming costs, but that they needed to recover their losses from April to June as well. They firmly expect winter to be difficult, but rather than setting the bar at break-even, they have set their sights higher. They are also looking at ways to take advantage of the fact that their business is agile; they can react quicker to changing market conditions than their competitors. They can use this competitive advantage to grow their business.
You can use your knowledge of your business and the market to add more benchmarks:
- How are my competitors doing?
- How much can my team accomplish at the moment? Are they still at home? Does this impact on their productivity?
- What new opportunities are there to sell differently?
- Would investment make the business more rewarding? What would that cost and where would it be applied?
These benchmarks will paint a picture; a landscape of possibilities will open up ahead of you. Your job becomes deciding where on that landscape you want to aim for. I’d encourage you to set SMART goals and be bold in setting your goals, in whatever form that takes for your business. Maybe setting any form of target is enough of a stretch for you right now. Or maybe you are feeling empowered to set an ambitious aim. Set your goal, work towards it and put some time aside to check if it’s working for you.
Ask yourself: are you struggling in the current uncertainty to know whether you’re doing is working? Whether you are doing enough? I can say with confidence that goals bring you that certainty. What they buy you isn’t money: they bring you the power to steer your business. Profit is a convenient consequence. In times like this when certainty is hard to find, goals can bring you the comfort and reassurance to know what you are doing is enough and where to spend your time.
We’ve been setting sales goals at JP Rata since the business was in its infancy. Early on, the goals were simple and somewhat clumsy; increase turnover by 50%. I’d set a goal and aim for it by the end of the year. Now, we have a monthly figure that we check in with weekly. Everyone in the team contributes to setting the goal and we are jointly responsible in making it happen. It’s beneficial for the business and has had a positive knock on effect on the team – we’re in it together. I’ve always been a good team but now they feel more in control of how they can grow the business. Everyone plays their part and we all know what is expected of us.
So, I urge you: don’t let the current times trick you into delaying setting goals. You need them now, more than ever. Use them to make your business fly.