Use milestones on your goal journey
Good goal setting can help you set up the whole picture of your business. If it helps you, break down your main goals into bite size bits so that you can organise yourself around them.
To do this, insert some milestones along the way. In other words, you may have to pass two or three milestones before you reach one of your main goals.
Milestones are signs along the way that show you that you are still on the right path and reassure you that your journey to the main goal is closing fast. So instead of one main goal that takes months to achieve, you now have a multi-part goal that allows you to tick off completed tasks every month or even every week.
Example 1
For example, let’s say my main ‘build or create’ goal is “to start a specialist consulting business in the building industry by 30th June”. My milestones along the way might be:
Milestone 1. Find an office space at desired rent by end of February
Milestone 2. Lease / buy equipment and fitout office by end of April
Milestone 3. Hire & train staff or arrange outsourcers by mid June
Achieve main goal. Open for business by end of June
Example 2
Let’s say my ‘customer attract’ goal is “to attract 200 customers by the end of year 1”. I can simply break this down to what must be done each week – i.e. about 4 paying customers per week.
Example 3
Let’s say my ‘future exit’ goal for my consulting business is to build a saleable asset (i.e. my business) that has a value of $1M in 10 years time.
(For the sake of simplicity I am omitting the effects of inflation and the present value of future dollars)
So working backwards, I will need sustainable earnings (i.e. bottom line, before interest and tax), of say $200,000 per year. That assumes my selling price ($1M) is the equivalent to a capitalisation of 5 times my sustainable earnings rate ($200,000).
(Be careful – the 5 times capitalisation rate I used is an example only and varies widely with the type of business, industry factors and economic conditions)
I will probably need to demonstrate 3-4 years of stable, sustainable earnings for my sale at year-10, so I will set the first time that I earn $200,000 net earnings as my year-6 goal.
Therefore, I will make my year 1 profit goal $50,000 and I will endeavour to add $30,000 to my net profit in each of the following 5 years to boost it to $200,000 by year-6. This is as big as I want to grow and it is also the limit of my current service capacity.
So in year-1, to achieve a $50,000 net profit, my sales will be $150,000 at a gross profit margin of 60% with fixed overheads of $40,000 (example only).
To achieve $150,000 sales I must sell my services to 200 customers at an average of $750 each (example only). At a 5-to-1 strike rate, I will have to make 1,000 calls in the year which is about 20 each week or 5 each working day.
So starting at your ‘future exit’ goal and working backwards is another way of arriving at today’s ‘customer attract’ goal.
By breaking down your goals and adding milestones, you are creating a ‘goal journey’. Now you can decide before you start whether your goal journey is achievable or whether it sounds a bit too hard.
Until next time!
Gary
Business coaching Brisbane – read my previous post for more on goal setting
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