At it’s heart, that’s it. Our goal is always to do better, to do more, to move forward. To cut through the clutter of stuff that conspires to hold us back or keep us still and to move ahead. To “beat yesterday”.
In order to do that you need one vital piece of information. You need to stare yesterday square in the eye without blinking. Maybe yesterday wasn’t pretty. Maybe yesterday didn’t do what you wanted it to, do, didn’t behave in a myriad of ways. Perhaps it even embarrassed you.
It doesn’t matter. In order to create tomorrow you must first understand yesterday. If you continue to hide it under the bed, as so many of us tend to do when our businesses are young, you have no foundation for “Where am I?” – you’re not standing firm ground.
If your sales are poor, uneven, or near-non-existant you have to own that. Like an extra five pounds you want to get rid of, it doesn’t go away by ignoring it. You have to face it squarely and decide how to deal with it.
The first step in setting your goals for the future is to lay out your past.
Gather your sales data for the last five years. If you haven’t been in business that long, take your entire history, every painful bit. If you’ve not been keeping those records, go reconstruct them. Pull monthly numbers from bank deposits if you need to – but get those figures. All we’re looking for is raw numbers of money in, so don’t get your knickers twisted about not having kept good cost-of-goods numbers. That will come down the road. One step at a time.
If you’re like me a nice glass of wine or two may help this process. It can hurt to take an unblinking look at where you are and how you got there. Remember, this forensic pain is to help you move forward, and to help you see your business more clearly – and also to get you on a path to keeping good sales records, but that will come.
Open up a new spreadsheet or clean ledger, whichever you prefer. I’m an Excel girl now, but back 100 years ago I used a marvelous ledger called “Beat Yesterday
” that you can still find here
(they have ledgers starting in prior years if you call) These babies give you a spot for every single day – we’re not getting that granular right now, we only need monthly sales.
Grit your teeth and fill in on those sales figures. Get our your calculator and figure out what your year-over-year has done. The up or down will be obvious – and you may even find reasons to celebrate you didn’t see coming.
What’s your pattern? Where in the year are you stronger, and where are you weaker? Has there been a slow creep up over the last few years, or a steady decline? Or are you at stationkeeping, treading water?
This is a beginning.
Whatever those numbers have been, look at the trend over how ever many years of data your have. What was the change for last year over the previous year? How much were you up? Figure the percentage.
How exactly do you do that…
Let’s say your 2015 sales were $5,000, and your 2016 sales were $7,000. To find that percentage, first subtract 2015 from 2016:
Then divide that increase by the 2015 number:
$2,000 / $5,000 = 0.4 or 40%
If it’s a negative number, you’ve gone down. So for instance if your 2015 sales were $5,000 and your 2016 sales were $3,500, we’d have this calculation:
(-$1,500) / $5,000= -0.3 or -30%
That’s not pretty, but if it’s accurate it’s gotta go on the books. It happens to lots of us all the time – even me. It’s to good, but it’s only deadly if you ignore it.
Okay, so you’ve got your sales numbers for the last 2 to 5 years set up. Awesome. Find your trend.
Creeping up? Slowing down? Steady rise?
Are you happy with what you see? Probably not – we never are. Looking at these numbers, you can pretty much forecast what will happen in the coming year if you don’t change anything, keep going on the way you’re going. If you like the way that looks, stop reading. If not, come on over a little closer.
Set your goal:
Now then, you’ve decided you want more. So take that trend line, and let’s decide where we want it to go instead of simply riding it. Maybe you were up 5% last year – or even down 5%. That’s not good enough. Even a laid back, part time, weekend-warrior kind of business should eek out a 10-15% increase, barring true catastrophes or illness.
What would that mean, given your numbers? Figure it out. Take those monthly numbers, and calculate (sales number) x 1.15=?
That’s your BOTTOM LINE goal. Your “I’m hitting this if I get hit by a bus” number. Figure it out for each month of the year and total it (you can use that same spreadsheet – make a copy)
Then do the calculation again, but this time plug in a more ambitious number – maybe 25 or 30%. What does that look like? How many pieces of work does that represent? (and have you figured your pricing correctly with a proper labor rate – but that’s another discussion)
What would you have to do, what would you have to sell to reach that number? How many shows, how many new accounts? What would it mean for your business, your life, your self image, if you hit that number?
Now do that calculation one more time. But this time use 50%.
How’s it feel?
A little scary, isn’t it? Or perhaps a little heady. Exhilarating. Is your heart pumping a little faster?
What’s your inner dialogue? “You know.. I think I could do that. If I add another show in April.. and two more in May… and that one in June…. I can do this!!” or are you thinking, “I could never do this. I’m not good enough. It’s too much.”
Yes you can.
This is why you’re here. This is why you started on this crazy long trip.
But you have to know where you are, you have to understand the lay of the land – and that’s why you must – MUST – always now where your sales are. If you don’t pay attention to your numbers you’re just playing house, pretending. A real business keeps track.
Be a real business.
Write it down. Do those calculations at 15%, 25% and 50%. Get scared. Get exhilarated. Get ambitious.
You won’t make every goal you set. You might make it one month and fall flat the next. Goals aren’t about always making them, they’re about pushing you to do better, about keeping you sharp and on point. If you always reach your goals you’re not setting them high enough.
Make a commitment now, today, to set a goal for this year, and to do everything you can to stay on top of it. Whatever works for you, spreadsheets, ledgers, notes, whiteboards, journals. Write down your past numbers, and your goal numbers. Every month keep yourself on track by comparing how you’re doing to how you want to do.
Not hitting it? What can you change?
Hitting them? Push them higher! Goals aren’t destinations, they’re journeys.
Remember, you started this business…. why? Because you want independence. You wanted to leave a boring job. You wanted your own business, with no one else to answer to. You want to make a difference, the freedom to create.
Without sales, nothing happens.
When you’re the boss, there’s no one to answer to but yourself. No one will ask you for the sales report. No one will complain to you about the sales trend. You’re IT.
That luxury can be our undoing if we don’t learn to track sales and set goals.
Most small businesses fail. You won’t be one of those statistics if you relentlessly track everything and set goals – then make sure you do your utmost to fulfill them.
Need support on the journey? Come over to F3, our free online support community for creative product business owners. It may be exactly what you’ve been looking for. Apply now