Wednesday, 12 December 2012

Up Side Down Goal Setting

Jim is a typical small business owner. Here is how he approaches goal setting:

“Ok, it is January 1. I better set some targets for this year. Let’s see, I did $800,000 in sales last year and had a net profit of $120,000. That’s not too bad considering how new my business is! So let’s see, that was 20% more than the previous year. So really I should be able to grow by another 20% this year if things continue at this pace. Yup, that sounds like a good number. So that means, (insert sound of calculator clicking or brain churning here) $960,000 in sales and $144,000 net profit. Nice, mark it down, that is this years goal!”

On the surface that’s not a bad goal at all. It is specific (it has exact numbers and a time frame to reach them). It is attainable yet challenging (the goal is within the business owners reach but will require growth). That gives Jim a very defined target that he knows he will have to work hard and be effective to attain. Great!

What is the reward in this goal though? Sure, he may feel some satisfaction in knowing he grew his business and that is a great feeling. Where is the reward that will really get him fired up to do the work and meet the challenge of this goal though? He may be able to pay himself some more money through that year. Again, that is nice, but it is just money. What is the real reward that will inspire Jim to put in all the effort that will be necessary to feel like he attained his goal?

Here is what Jim’s goal setting process (and that of many entrepreneurs) looks like.

In this funnel a business owner focuses all of their attention on how big they want their business to be. They set a number as far as how much production they want in a certain time period. Then they determine by what method they will reach that number. For example, they may need to introduce new products or attract more customers. After that, they determine what the business needs (More staff? new resources?) to make that happen. Only once all of that is determined will they make a plan to reach the goal.

The worst part of this though, is that personal goals are left until the very end. If there is time and money, the business owner will give themselves a reward for reaching their business goals. When a dog performs a trick, it gets a treat from its master. It is similar here, when the entrepreneur gets the business to its goal, it will receive a treat from its master.

That is the road Jim is going down. He knows the growth he wants to see in his business and he will find ways to make it happen. But there is no specific reward for him if it happens. At the end of the year he may be able to cut himself a nice bonus check basically letting his business pat his head and say, “Who’s a good boy? Whoooooo’s a good boy? You are! Yes you are!” and toss a jerky treat his way.

Do not create a business to be your master!
You must be the master of your business!

When you started doing whatever it is you do, it probably wasn’t with the intention of becoming a slave to what you have built. You most likely did not envision yourself as a mere pawn of the business you have created who hopes for a reward at the end of each year.

You started your business or career with the intention of creating a good life for yourself. You created it seeing your business as a means to freedom, wealth or whatever it is you desire.

By setting goals that put the business first, you will eventually become just another employee with a fancy title. YOU DON’T WANT THAT! (Right? … You better not want that).

Set goals that put you as a human being first!

Flip that funnel over!

In order to feel truly fulfilled by your business, you must realize that you are a human being first and an entrepreneur second. If you want to feel fulfilled, you must make sure that all of your business plans stem from knowing what you want in your personal life. By identifying that first, you can then determine what your business needs to look like in order to provide that fulfillment.

Do you want a hyper active life full of Ferrari's, mansions and parties? Build your business in a way that can get that for you. 

Do you want a relaxed life doing what you love in a cabin near the mountains? Build your business that allows you to have that.  

  • Set your personal goals first. Then make a plan for how your business can provide that for you. Will it need to give you money? Time? Freedom? Whatever the case, plan your business around that goal. 
  • Next, determine what your business needs in order to execute that plan (More staff? Less hands on involvement by you?). 
  • After that, determine the method you will use to meet those needs. (Work with only select customers? Find a new niche market?) 
  • Only after all of this is decided should you set a business goal. It will be the sales your business needs to do in order to execute the plan that will provide your personal goals.

Remember, your business is nothing but a tool to provide what you want as a person. Make your personal goals the first step insetting your business goals. Then watch your business provide what you want for your life.

Here are some questions to help you define those goals

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