In Business Planning Made Easy Part I and Part II; Vision Statement and Mission Statement, we provided the definitive answer as to how they differ, why they are important as the first two elements of the business plan, plus we gave you guidelines for how to complete each in an easy, fast, sustainable and entirely practical manner. Now we move on to Objectives.
If you missed them catch them here:
- Business Planning Made Easy Part I – Vision Statement
- Business Planning Made Easy Part II – Mission Statement
Now we move on to Secret #3 of the 5-Secrets to Business Planning that makes Business Planning EASY, FAST, SUSTAINABLE and entirely PRACTICAL….OBJECTIVES.
You may recognize the name from your prior corporate business planning life, TARGETS more readily.
In either case, this is something as a business owner if you are typical, and I don’t mean to suggest you are typical but if you are typical, you hate!
The idea of measuring yourself against some preset expectation, that you will argue is out of your control, seems pointless. After all wasn’t FREEDOM, NO BOSS and NO PERFORMANCE EXPECTATIONS the very reason you became a business owner?
I’m fine with that. Don’t measure anything. Stay in the dark. Continue to work harder and harder and continue to gain no traction on getting to or breaking through to the true level of Revenue and Profit you have previously dreamed was possible.
But if you are going to do that then I have to ask, no TELL you, to stop coaching your children to their sports and education performance because to do otherwise will make you a hypocrite!
I don’t mean to be unkind. But that is the case. If you don’t measure outcomes in your business don’t be a hypocrite and hold others accountable to their performances.
Listen we all played sports got measured in time, distance or score and we survived.
We all went to school and got measured with aplpha (A,B,C) or numeric (%) representations of how well we performed and we survived.
In fact many of us thrived in sports and school because we realized those measurements enabled us to know what and how to practice/study to get better.
Moreover, as I alluded to earlier, we send our children to school and have them engage in extracurricular sports or other competitive activities (dance, chess) and encourage them to welcome the feedback the measurement provides. We want them to learn from it. They too survive if not in fact thrive.
We all understand that for school and sports measurement doesn’t set us up for failure it sets us up for SUCCESS. So why is the prevailing attitude of business owners exactly contrary to that perspective?
So as I said either begin to welcome measurement into your business as a valuable tool, the stepping stone to your financial success or…stop critiquing the kids.
Assuming you will now accept the accountability to measure, let’s define an Objective for your business planning.
Objectives are specific targets that you want to achieve for your business in the current fiscal year. They should therefore be set in the business plan to end at the year-end or sooner (for mission critical outcomes).
The most common Objectives are financial in nature; Revenue and Profit (which are mandatory in business planning). In a Balance Scorecard approach there are ,many other measurable outcomes to consider; personal development, customer satisfaction, and operational efficiency measures to name just a few.
Objectives are only an Objective if they can be measured.
As our business planning methods are EASY & FAST lets continue to keep it that way by suggesting that an Objective only needs a verb, a noun, and a date. Achieve (verb) Revenues (noun) by December 31, 2015 (date). Now fill in the amount to create the Objective.
Achieve $3, 450,000 in Revenue by December 31, 2015 ( a 35.6% increase over 2014)
Adding the magnitude over the prior year as a percentage just adds a little more power to the business planning process.
Now let me make this even easier. For most small businesses you only need 6 Objectives. One as I said is Profit. Now let me show how starting with the Revenue Objecitve we can drill down to a Weekly activity Objective with the remaining 5 in our business plan creating your Weekly Marketing Reality.
- Revenue: Achieve $1,000,000 in Revenues in 2015
- Achieve Average Revenue Per Sales of $10,000 through to December 31, 2015
- Add 100 new clients by December 31, 2015
- Achieve a Close Rate of 30% through to December 31, 2015
- Conduct 300 Prospect Sales Meetings by December 31, 2015
- Achieve Net Profit of $150,000 by December 31, 2015.
Setting aside the Profit Objective, by setting the other 5 Objectives I have defined my Weekly Marketing Reality if you see the POWER in the math in this business planning example.
If I meet with 6-7 prospects/week for 48 weeks (I take 4-weeks vacation) I will meet with 300 prospects. If I close 30% of them I will achieve 100 closed sales and if those sales average $10,000 each then I’ll earn my $1,000,000.
Math doesn’t lie.
For businesses with Revenues already over $2,000,000 your Objectives may be somewhat more complex. The image here provides a selection to consider.
Now I do understand that math may not be your forte. But you are stronger than Ma and Pa Kettle shown HERE. Have a look, laugh and then come back to review recommended Next Steps.
Before I finish this Objectives section of Business Planning I’ll suggest you stay tune because the most critical element of setting Objectives after setting in your business planning process is to then MEASURE them. We have an up-coming post on the role of Measurement in your business planning coming up.
WHAT’S THE NEXT STEP?
1.You can find out more about what a business plan is and its importance with the international best-selling book CHAOS; How Business Leaders Can Master the Power of Focus. Get your FREE copy HERE
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