Reaching new revenue levels is a common annual goal for businesses. But every business is unique in various ways, based on its location, product or service, and market reach. Some companies need to grow faster than others for a myriad of reasons. The key to matching sales performance with company goals is to be realistic and flexible in establishing short-term and long-term metrics for measuring success. Here are important points to set sales goals for a small business.
Why Business Goals are Essential
The reason it's crucial to set sales goals for a small business is because it clarifies expectations rather than having no idea where the operation is headed and just relying on chance. Setting sales goals involves making revenue estimates for various time frames, such as daily, weekly, monthly, or yearly transactions. By establishing both short-term and long-term goals, you develop a roadmap for your team to follow. Without this guidance, a team can wander astray in different directions, making sales more unpredictable.
Segment and Prioritize Your Sales Goals
The key to reaching smart sales goals is to narrow your focus and establish priorities you are committed to following. It's particularly helpful to set clear milestones that lead to reaching goals over time. This approach allows you to break down your goals into steps that demystify the company's mission. Goals become more manageable when you concentrate on short-term metrics representing incremental progress. If you constantly meet these benchmarks, the long-term picture will take care of itself.
There are various ways you can divide your sales goals into segments to simplify the process. Aside from different time frames, you can segment sales goals by revenue source, sales teams, or individual performance. New employees typically are allowed more leeway than senior sales team members.
Other ways to clarify the sales journey include setting revenue quotas and sales objectives for teams or individuals. Quotas are specific benchmarks that meet company expectations, while objectives can be broader, as quotas are subsets of objectives. An example of a sales objective might be reading a certain number of emails per day in search of new leads, while a quota might specify a certain number of leads per day that convert to sales.
Some companies set strict quotas to ensure sales activity and growth. But lack of flexibility can also lead to worker frustration, burnout, and high turnover. For example, the "great resignation" of mass job abandonment during the pandemic sent a wake-up call to employers that they must be cognizant of a work-life balance for employees. High turnover could be better for a company's reputation and finances. It makes more sense to attract, nurture, motivate and reward sales talent on a personal level than to enforce strict rules that constantly weed out new employees.
Learn What Your Target Customers Want
Learning as much as possible about your target market is a potentially transformative element that makes setting sales goals easier. The more you know about your customers and their purchasing patterns, the easier it will be to sell to them. Use surveys and personalized conversations to gather data you feed to a customer relationship management (CRM) platform.
Once you've developed resources to collect data on your customers, you can take actions that boost revenue, such as increase average spend per customer. Some of your options to boost revenue include raising prices, upselling in your marketing, and partnering with relevant businesses for cross-promotion to share audiences. Offering gift cards is another effective way to stimulate interest in your brand.
Know Your Break-even Level
Startups typically wait to become profitable, but it's vital to keep accounting under control. You should know your operation's break-even level to avoid falling into debt with expenses. Cost-cutting is fundamental to a new small business as part of planning revenue goals. Overspending on upfront costs can hurt, pushing goals back further into the future. But if you always keep your break-even point in mind, it can pave a quicker path to profitability.
To reach a break-even level, you should calculate the number of units you need to sell and the number of customers you need to attract to your marketing efforts. Once you mark your break-even point, you can then determine profit goals. It's a good idea to set monetary and percentage gain goals to clarify how much you want the company to grow in revenue.
Estimate Revenue Targets Realistically
When you set sales goals for a small business, they must be realistic; otherwise, they may not be achievable. A small company can only create so much market disruption, especially if it doesn't spend much on marketing. The quality and experience of your sales team will also significantly impact short-term sales targets and annual revenue. Furthermore, you need to set realistic expectations for cold calls, which by definition, are far from conversions.
Look at your historical sales data and analyze conversion rates. When goal setting for small businesses, be cognizant of your sales cycle. Studying sales charts that depict your company's evolution over time will help you formulate a clear vision of your market's ups and downs. This analysis will not only help you set realistic goals, but it will also keep you from draining resources on inefficient activities. Spending too much time with cold rather than warm leads is one of the big reasons many small businesses fail.
SMART is an acronym in the sales world for a goal-setting paradigm in which you can apply these terms:
- Specific - Use action words to describe how you intend to reach goals
- Measurable - Identify meaningful metrics to your business that affect profitability
- Achievable - Operate within your scope of capabilities
- Relevant - Emphasize strategies that have a direct impact on sales
- Time-bound - Set deadlines to reach benchmarks and milestones
Review Your Sales Process
Effective sales management requires looking for ways to increase sales to meet or exceed the bottom line. You need to identify your team's greatest strengths and weaknesses to keep your goal-setting in perspective. From there, you can either try to improve upon your parameters or work within them. At this point, you should assess your team's ability to generate warm leads in a timely manner. Digital marketing strategies such as search engine optimization (SEO) and pay-per-click (PPC) advertising can be very beneficial in generating a stream of endless leads.
Your sales process assessment should include identifying your unique selling proposition (USP), which defines your brand's uniqueness compared with competitors. The next step is to communicate your USP with your target audience. If sales aren't reaching projections, it could be a sign that your marketing messages need adjusting. Be aware that digital marketing works best when you choose the most appropriate keywords that match your USP and use them in various creative ways.
Make Customer Service a Focal Point
One of the best goal-setting strategies for any small business is to emphasize improving customer service. Treating customers as special or acknowledging their loyalty accelerates the sales journey. So if you prioritize the customer experience as monumental to the sales process, you will have a better shot at converting leads to sales. The more you correlate the quality of your customer service with conversions, the more reliable your revenue forecasts will become.
In general, the more your customer base grows, the more you need to set specific goals for maintaining and improving customer service. It's easy for a small sales staff to deal with a small customer base, but once the brand takes off, you'll need to consider scaling up staff size to meet the demand. Some small businesses actually fail because they don't have enough sales agents or customer service representatives to keep up with growing demand.
Execute Best Practices for Team Building
Team building was an often overlooked aspect of business development last century, but now it's much more at the forefront. Selecting experienced sales talent is part of the equation for a winning sales operation. But if resources are limited, you may need to rely more on training new talent. Either way, you cannot ignore the significance of building a loyal team motivated to increase sales.
A winning sales team doesn't necessarily need years of experience selling to a specific target market. It's possible to energize a group of young people to enjoy sales, stimulating sales growth. Effective team building relies on strong and clear communication. Acknowledging the efforts of individual contributors is essential to crafting a cohesive team that enjoys working together toward the same goals.
Don't underestimate the power of positive thinking. A sales agent's goal is to convince a customer that a product's or service's positive features are worth the cost. Team leaders set the tone for their workplaces, as many workers follow by example. Make sure you foster a friendly environment where it's easy for teammates to interact with each other. By rewarding sales representatives with short-term bonuses and workplace flexibility, it's possible to quickly build a winning sales team from scratch.
An annual sales goal based on realistic parameters will help your business succeed. Without clear goals, an enterprise can get lost in the shuffle of competition. The goals you do set will help guide you toward reaching them simply by always being aware of them as a central theme to your work. Learn more about small business website design and management to set sales goals for a small business.