The Difference Between Businesses That Hit Their Targets and Those That Don’t-img

By Mark Creedon

The Difference Between Businesses That Hit Their Targets and Those That Don’t

The Difference Between Businesses That Hit Their Targets and Those That Don’t

 

As the end of the financial year approaches, many business owners sit down to set targets for the year ahead. The process usually looks something like this: review last year’s numbers, add a percentage increase, create a revenue goal, and get back to work. It feels logical. After all, business is measured in numbers.

The problem is that numbers alone rarely inspire action.

A bunch of numbers on a spreadsheet don’t matter by themselves. No, it’s why they are there, what they mean, and how they’ll be achieved. See, that’s where many businesses get stuck, they become focused on the score rather than the game itself.

A revenue target might tell you where you want to end up, but it doesn’t tell your team what they’re working towards. There’s no momentum, there’s no buy in. People struggle to figure out where to start and how their role contributes to the bigger picture. By the time you start figuring it out, half the year is gone, and those ‘targets’ are no closer to being hit.

My advice is taking a step back and asking a different question: What do you actually want your business to look like in twelve months’ time, not just financially? That’s how you’re going to uncover your vision and gain some clarity about your hopeful destination. After that, targets become easier define and easier to understand for everyone involved.

The way targets are presented now, they only seem relevant for sales teams, but it’s deeper than that. There’s the receptionist who answers the phone and introduces clients to your business, or the accounts team that ensure cash flow is running smoothly. With revenue targets, only a small portion of a business is being measured for success. Rather, when targets are linked to each person’s contribution, ownership and engagement is increased.

That’s why some of the most effective business metrics have very little to do with profit and loss statements. They evaluate response time, staff retention, referral numbers; which reveal a whole lot more about the future health of a business than revenue alone.

This is what I call leading indicators, which are far more preferable than lagging indicators. Revenue tells you what happened. These other targets tell you what’s about to happen.

Too many businesses wait until the financial numbers change before they react and, by then, the underlying issue has been building for months. The strongest businesses pay attention to the signals before they become problems.

As you plan for the year ahead, I’m not saying to ignore your finances. They’re absolutely crucial. What I am saying, however, is that numbers should be the outcome, not the starting point.

Start with the vision, decide what success actually looks like, and give every member of the team something meaningful to contribute towards.

Because when the right people are focused on the right activities, the numbers have a habit of taking care of themselves.

 

Catch the full conversation on the Families in Business podcast, available now on your favourite podcast app and YouTube.

 

 

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Mark Creedon

Mark Creedon is the founder of Business Accelerator mastermind by Metropole and business coach to some of Australia’s leading entrepreneurs – helping them build a true business, not a job.

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