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How to set realistic sales goals for your small business

How to set realistic sales goals for your small business
Enterprise Nation
Enterprise Nation
Enterprise Nation
 

Posted: Thu 9th Sep 2021

Goal setting is a popular activity when we’re feeling bright-eyed and bushy-tailed at the start of a new year, but it’s something small business owners should be doing all year round.

Setting sales goals is a great way to increase your motivation and maintain your drive. They also give you clear targets to work towards – something that’s vital when you’re a business owner and distractions are rife.

While most founders have an idea of their ultimate goal for the business (multiple locations, a team of talented staff, world domination etc.), sales goals are trickier to pin down. 

Being overambitious can leave you feeling deflated if you don’t reach your own sky-high aspirations; being under ambitious can result in a lack of progress.

So how do you achieve the perfect balance? We asked a group of sales experts for their advice on setting realistic sales goals for your business.

Look at your long-term goals

A good place to start is by looking at your long-term goals. Siobhan Gallagher, founder of Idea Mint, emphasises that you need a clear vision in mind.

“If you take it back to basics, a sales goal is a target you’ve set for your business; a destination that you want to reach by the end of the month, quarter or end of your financial year. So, first, you need to be clear on your destination: where do you plan to take your business, what do you want to achieve and by when?”

It’s important to factor past sales and customer buying habits into the process. Even if you’ve just started out and don’t have a lot of information to work with, try to ground your expectations in data as much as you can. Siobhan says:

“To set realistic goals, you need to take account of previous sales achieved, the size of your potential market and the resources available to you.”

Break your sales goal down into smaller chunks

Once you have a destination in mind, you can start to break down your strategy for getting there into smaller goals.

For example, let’s say you run a social media consultancy and your annual goal is to grow revenue from £50,000 to £100,000:

  • Identify average client spend: If you have five clients who spend £10,000 each, a good aim would be to win another seven clients (assuming one or two existing clients drop off).

  • Determine your meeting “win” rate: From there, think about how many client meetings result in a sale. If one meeting out of five converts into a customer, you’ll need to have 35 meetings.

Now you know that you need to have around three meetings a month to achieve that goal. 

The next step would be thinking about how you’ll win those meetings and what you’ll do on a weekly or daily basis. This could include:

  • attending an event 

  • running an online ad campaign

  • setting aside a certain number of hours to do cold outreach

Don’t be afraid to get granular with your goals – keep breaking them down until you have a clear idea of the tasks you need to work on and how often.

Use short-term goals to react quickly

As Matt Jefferson, founder of Jefferson Sales, points out, short-term goals don’t just help with motivation – they can help you adapt to the unpredictable nature of the business world too.

“In a predictable, historic business that is in a stable market or environment, you can set long-term aims such as annual goals. None of these things exist anymore: there’s technology, ease of competition, the pandemic and economic uncertainty. 

“While the business may have longer term goals, I’d advise setting monthly and quarterly sales goals. Six months is as far as I would go, so you’ve got the chance to refine your goals.”

Add a stretch sales goal

A stretch goal is a target that’s significantly harder to achieve. This type of goal is a great way to keep motivation high and can prevent complacency setting in if you hit your target.

Stretch goals are designed to be ambitious and borderline unrealistic, but they can push you to find new capabilities and ways of working.

A famous example is Southwest Airlines’ early stretch goal of achieving a 10-minute turnaround at airport gates. The task was familiar for staff, but the industry standard at the time was close to an hour.

To reduce gate turnaround time, the airline had to overhaul its work practices and think about its customers’ behaviour. Famously, Southwest managed to achieve its goal.

Have a mentor or peer to hold you accountable

Once you’ve set sales goals, it’s important that you’re holding yourself accountable for achieving them.

Review the results on a regular basis and analyse what went well and what didn’t. It’s best to book in time to do this so you can react quickly if things aren’t working the way you expected.

It’s useful to have a business coach or mentor to chat through your progress and make sure you stay on track. A third party can also provide a valuable external perspective and draw your attention to new ways to achieve your goals.

If you’re just starting out and can’t justify the expense of a regular coach or mentor, don’t worry. Team up with another founder, explain your goals and agree to hold each other accountable.

It’s also worth getting in touch with your local business hub to see if there are any business grants or coaching opportunities available.

Five takeaways for setting realistic sales goals

Here are five quick takeaways to improve your goal-setting:

  1. Be clear on your destination: Know what your long-term goals are for your business.

  2. Break down annual goals: Translate them into quarterly, monthly, weekly or even daily targets.

  3. Use short-term goals to stay agile: Markets can be unpredictable; short-term goals mean you can react quickly.

  4. Add a stretch goal: Set an ambitious target to keep you motivated.

  5. Hold yourself accountable: Work with a mentor or peer to check in on your progress regularly.

 

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Enterprise Nation
Enterprise Nation
Enterprise Nation
 
Enterprise Nation has helped thousands of people start and grow their businesses. Led by founder, Emma Jones CBE, Enterprise Nation connects you to the resources and expertise to help you succeed.
 

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