Are you Making these 3 Goal Setting Mistakes?
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It’s accepted wisdom that setting goals is a critical step to growth and accomplishments. But they can also hurt us and keep us feeling terrible about ourselves and stunt our self-esteem when set incorrectly. By no means is this a critique of goal setting as a practice. The issue is deeper than that, it’s how we set them, and the process we use to achieve them.
Corporate vs. Independent Business Ownership
When I was in corporate, my supervisors always encouraged me to set higher goals and they offered me whatever resources I needed to achieve them. It was an amazing feeling to be so supported by an institution and I loved that professional growth cost me almost nothing out of pocket.
When I started my own business, I was faced with the harsh reality that I no longer had a corporation bankrolling my professional development or providing me with clear pathways to growth. I quickly learned that there’s a lot more to goal setting and growth when you’re the one bankrolling the entire business. I also learned that when I was in charge of setting my own career path, I had no idea what to choose. In corporate there was a pre-planned set of options. Now, the opportunities were endless, and they all had a price. I realized that I had no idea how to set goals for myself as a business owner.
I’d heard of SMART goals, and it made sense to me practically, but I still found myself setting goals that were just out of my reach, so clearly, I was missing something. After a lot of soul searching, analysis, and reflection, I realized I had a faulty premise when it came to goalsetting. I was starting in the wrong place, as were most of my clients.
Flat Sales Goals
The first problem is that business owners often set a flat sales goal for each month during the year. Every month it’s the same amount, and that number is selected using predictable data points:
- There’s an incentive offered by your parent company for hitting a certain milestone each month
- Other business owners with established success will let you know their current sales to use as a guideline
- The business owner’s financial needs
Each of these options seems reasonable as a starting point, but this process sets business owners up for months of heartache and struggle. Let’s examine each of these goal setting techniques one by one, why they are ineffective, and what finish up with alternatives.
Incentive Goal Setting
Business owners who are inspired by recognition or rewards find these kinds of incentives from their home office motivating and will sacrifice and invest whatever is necessary to hit that goal. The milestones for these incentives are typically set during the early years of a company’s life. The number is selected based on sales during the honeymoon period but will get harder for retailers to hit as the product becomes more routine and mainstream.
Why this is a problem
What this goal setting technique ignores is that it’s easy to sell 10x what the norm is for any product when its shiny and new because everyone wants to try it out. Think of all the fads over the years that we waited hours in line for. Tickle me Elmo, Tamagotchi, Cabbage patch kids, heck even MTV were in high demand when they first launched. No product can sustain that level of intensity forever, and eventually it’s no longer the new hotness, its routine. When that shift happens in direct sales, it makes it harder for business owners to reach those goals. Less people achieve, and morale falls.
This also completely ignores the evidence demonstrating that for the last 30 years, sales fluctuate from month to month. Some months are higher than others, some months are lower depending on the time of year, seasonality, target audience type, whether school is in session, and a whole lot more. Having a flat goal set for each month assumes that the consumers will purchase based on how we want them to purchase, not on historical data.
Other Business Owner’s Goals & Achievements
It’s lonely being an entrepreneur, so it’s common for us to look for support groups and friends in similar businesses. Eventually these friends start to share their sales goals and achievements with us. No matter what they are, there’s always going to be someone with higher sales than you, someone you see as more successful. It makes sense to ask them for advice about what’s working and what’s not working for them. But sometimes, we also ask them about their goals and aspirations, and how they got to where they are. The thing with successful business owners is that they often have a strong understanding of their target audience, the market for their product, branding, and growth for their business. They subconsciously know that their success came from several influencing factors, but don’t think its relevant information when sharing their numbers. These include:
- Size of their community before they started their business
- Whether they have a mental or physical challenge to mitigate
- Their understanding of social media algorithms (consciously or subconsciously)
- Threshold for risk
Why this is a problem
New business owners don’t have this same experience so will often copy exactly what someone else does, only to find that it doesn’t work for them at all. Because success isn’t only about taking the action. It’s about how the action is constructed, and the understanding of the marketing psychology behind its success. If you haven’t ever been trained or put in a position to learn these skills, you won’t know you need them. In our minds then we reason that if they can hit that goal so can we, we sell similar products. We don’t realize how many other variables contributed to their success, so we’re unlikely to see the same return on our investment.
Your Financial Needs
This is the most prevalent goal setting mistake and is also the most painful. I initially set my goals using all 3 of these, but this one was #1. I needed to make a certain amount of money each month to live. I set my sales goals based on that number. I would workdays, nights, weekends, and forgo eating and sleeping to hit that goal. Didn’t matter what the goal was, or if I had the infrastructure to support it. The only thing that I wanted was to hit that goal. I truly believed that if I worked my ass off, I’d hit the goals I set, because I needed to hit those goals, no matter how realistic they were. I fundamentally expected my need to outweigh all other factors that could possibly be influencing my sales.
Why this is a problem
Your sales don’t care what you need to make. The fact of the matter is, your need for money has no impact on whether you will make that money. I believe in the law of attraction, and that it takes the right mindset to manifest the future you want, but it also takes strategy and thinking outside the box. Your ability to hit sales goals depends on whether you have the inventory and customer base to support that volume (otherwise you’re asking the same number of people to spend 2x to up to 10x what they’re spending now on the same inventory they saw last sale). Without growing your customer base and your offerings simultaneously, increasing your sales is unlikely.
This may sound like the issue is with us as business owners. That we aren’t able to hit the goals we set for ourselves. The truth is that we can hit our goals. Anyone can hit any goal that they set for themselves, but not necessarily on the timeline we want. Its unlikely that you’ll go from selling a few hundred dollars each month to selling thousands of dollars each month over the course of 30 days without a significant financial investment. Significant enough to where the cost may outweigh the benefit.
Based on this analysis of why I was feeling like shit, suddenly it made sense. Here’s what I was actually saying, “I want to double or quadruple my sales in less than 30 days with the same customer base I have now, using the same product I have now, without having a plan for how to get there other than I’ll sell more or do more IPAs”
Suddenly it made sense why I was feeling exhausted all the time and like a complete failure as a business owner. If you’re setting goals based off feelings, need, and a flat scale, you’re almost always going to end up feeling like shit, because you’ll hit those goals only once every few months, and there’s no plan for growth other than the desire to hit a new goal and to sell more.
The key instrument for change was going to be how I set my goals in the first place then. I needed to establish my goals using these guidelines.
- My goal could be whatever I wanted – 2x, 10x, 100x my current sales
- Assess what each customer spent with me in a month on average to determine how many new customers I would need to hit my goal
- How many new customers I acquire each month on average
- Use that information to develop a plan to acquire that number of customers each month, which would tell me how long it would take for me to hit my goal.
- If I wanted to shorten that time, I could come up with an accelerated plan, but would need to see how it worked before changing the timeline
- And finally, I would set up monthly milestones to give me that dopamine hit and allow me to keep up the progress.
It took me a few months to really iron out these numbers and break free from my earlier preconceptions about goals and sales. I created a spreadsheet that you can download for free to help you understand what your business looks like now, so that you can identify the quickest path to get to where you want to be. I can promise that it won’t be as quick as you want, but it will be way faster than what you’re trying now.
How to Tell if Your Goals are Impractical
Look at your sales since you started your business and then look at the goal you’ve set for yourself each month. How many months did you hit your stated goal? If you hit your stated goal more often than not, then chances are, you’ve set a good goal for yourself. If not, then you may need to revisit your goal.