I wrote about how to avoid the annual Q4 panic last month. In an open-fire-roasted-chestnut shell, don’t get yourself into a cycle of unreasonable goals that are then demoralizing and demotivating to your staff, instead, set goals that are lofty but achievable.
So how do you go about setting such goals? I’d like to share a little dynamic that happens — a lot — in my house:
My husband: “How much do you think we should [insert something here]?”
Me: “Oh, that feels like it should be 7.5%”
My husband: “Really? What does a 7.5% feeling feel like?”
This has been going on for more than a decade. I have numerical feelings. I do. But if I can’t defend them, they aren’t terribly useful (but don’t tell my husband I said that).
Say your margins have been trending at 50% for the past 12 to 18 months, but you are putting 65% margins into your budget for next year. You’d better have a damn good reason for a 15% increase. Because wanting 65% margins is not the same as being able to achieve them. It’s not enough just to feel or say that’s what you want to do (again, do not tell my husband that). What are you doing to achieve that? Are you putting in a new piece of equipment? Are you downsizing? Are you cutting your costs in some other way?
The past doesn’t always have to be an indicator of future performance, but you have to have a super-good reason for why it wouldn’t be.
So, what does a goal feel like? It feels like you could defend it without a lot of effort.
More things to think about when setting goals:
- If your goals are contingent on things that are out of your control, you need contingency plans. You can’t control whether a client signs that deal, but you CAN control whether or not you staff up to address that client’s needs.
- Goals should be tied to the intrinsic nature of your business and not based on what the plan was in 2021 for what you thought 2024’s revenue was going to be.
- Let go of your ego. As I wrote in “Pumpkin Spice and Panic in the Air”: When a client says: ‘Well, I have to hit 50%, because that’s what I said I was going to do. And if I don’t, this is the third time in a row I’m not going to hit it, and I’ll look really bad.’ Worst. Possible. Reason. They should re-examine the fact that they’re setting unrealistic targets, not the fact that they can’t hit them.
One more thing: There is a big — HUGE — difference between defense and excuse. Defendable means you’ve thought about how and why you’re getting to the place that you want to be. Excuses sit all by themselves in the corner, yet somehow get in your way.
If you need to beef up your defense, call me. We’ll talk.