DWC Home | Magazine | Back Issues | December 2005 | Managing For Money

Goal Setting Is Powerful!
If you are doing it, this will help. If you are not, now is the time to start.

by Steven C. Bursten

The New Year is the perfect time to plan your goals. (Actually, the perfect time was last October, but you were probably busy back then). If you are uncertain how to set goals for your business, this article will tell you how, step by step. Once you try it and experience the results, you will never go back.

I have taught this system to hundreds of business owners. Those who use it are hooked for life. They feel in control of their businesses as never before. Now, you can make 2006 the best year of your business career and set a foundation for lifetime growth.

If you are a reader of my articles you know the basis for improving business: keep records of appointments and customers sold; from your records set benchmarks for your existing performance; then set new goals to improve yourself; and, finally, visualize your plans with mileposts to achieve your goals.

Along with this column is a special form—a tool—to help you manage and measure the three critical factors for building your sales: 1) appointments; 2) closing ratio; 3) average size of customer sale.

The idea of this form is to begin with your current sales performance. It is essential that you use factual records or the exercise is fruitless. If you are not now tracking your appointments and number of sales, go back for about 30 appointments and use that as a baseline. Then count how many customers were sold, total your sales for those customers and you are ready to begin.

This year dozens of small and large businesses have used this tool. The comments I have heard most often, were like the one from Susan Day in Illinois, “I didn’t realize how few appointments it would take to have a good business.” When you set goals correctly and manage the size of sale you will discover that only two to four new appointments a week will give you an excellent business and high income. So, let’s get right into it!

GOALS PLANNING FORM

Begin on the top line if you have records from the entire year. If not, use whatever period of time you have. The important line is the second one: Your current monthly average.

Step 1: Enter your appointments, closing percentage, number of customers sold, average sale and total sales for the time period you have available. Let’s assume you had 100 appointments last year, about two per week. Let’s assume your closing ratio was about 67 percent or two out of three, and your average sale was about $1,500. That means your total sales for the year were $100,000.

Step 2: Enter the monthly average. If your sales are for the full year, divide by 12. If only for two months, divide by two.

Step 3: Enter your sales goal for 2006 at the bottom right. Let’s assume you want to increase to $150,000 this year. Seems like a big jump. You would have to have a 50 percent increase in appointments if nothing else changes . . . but, let’s look at other options. Appointments are not easy to find. They take time and money, yet maybe it is worth a little effort. Let’s see how it works.

Step 4: Enter your sales for the second half. My experience is you probably will sell a little over half your sales in the second half. So let’s assume that 52 percent of sales will be in the second half and 48 percent in the first half. Enter $78,000 for the second half sales.

Step 5 and 5a: Enter your fourth quarter sales. Experience tells us that each quarter in the second half of the year will be about equal. Sounds strange knowing how strong the fall season is, but with sales falling off in December, it actually works out for many businesses. So enter $39,000 for your third quarter and fourth quarter sales.

Step 6: Enter first half sales—48% x $150,000, or $72,000.

Step 7 and 7a: Enter first quarter and second quarter sales. Same principle, divide the quarters equally for $36,000 each.

PAUSE AND REFLECT

OK, we have done a lot already. We have a plan for sales for each quarter. You can break the months down from here. Just adjust for your busy and weaker months sales. If we never went further, you could be way ahead for the year just to have an annual and quarterly plan. But, let’s not stop. Let’s see how easy it will be to achieve your plan. It is all in the numbers.

Step 8: Set your goal for average size of sale. This is the most important step of the entire exercise! You may be surprised that increasing closing percentage is not more important. You will realize why when you fill out the form.

Let’s assume you want to increase your average sale by just $200 per customer. If you average $1,700 for the entire year, you want to plan steady improvement. That means you will be less than $1,700 per sale in the first half and more than that in the second half. While it is not mathematically exact, let’s plan to improve by $100 each quarter. Since you are starting at $1,500, by the end of the year you will have a $1,900 average sale and your overall for the year will be roughly $1,700.

How can you increase your average sale this much? Educate yourself to sell add-ons. Attend sales training by industry leaders who focus on this one aspect. Also check out www.windowcoveringsuniversity.com. It can pay giant dividends the rest of your career.

Step 9: Now, it is simple arithmetic. From here all you do is divide your quarterly sales by your average sale for each quarter. That will tell you how many customers you need.

Step 10: Same thing, simple arithmetic—divide the customers you need by your closing percentage and you will see how many appointments you require.

See how simple it is to plan your year? The next step is to visualize your plans to achieve your plan.

$20,000 MORE NET PROFIT FOR YOU!

Now, look at what you have accomplished: You can see that all it takes to achieve your goals are two to three more appointments per month and less than 15 percent increase in average size of sale. Yet the result is a $50,000 increase in sales! If you earn 45 percent gross profit, you can afford to spend five percent of your increase on advertising and still earn $20,000 more for yourself. Pretty good pay for a few hours setting goals and planning how to achieve them.

No question, you can do this. Never again do you have to experience that panicky feeling that you are out of control. And, here is the best part: when you achieve your goal for increased average sale and your appointments hold steady at 11 a month, you actually will be above your goal! And, you will be on your way to $200,000 next year! So, plan for 2006 today and enjoy the benefits the rest of your business career!

This article is based on Steven C. Bursten’s actual experience with sales and financial information working with hundreds of window coverings businesses. Whether you are a sole manager who aspires to higher sales, or you manage 50 window fashion decorators in a multi-million dollar business, this series will help you manage sales better and increase your profitability. Bursten is the retired founder of Decorating Den Interiors and author of a how-to book on new business start up, “Bootstrap Entrepreneur,” and is a leading expert in window coverings marketing, sales systems and sales management through his company, custEmers.com. Questions and comments welcome: steveb@custemers.com or call (888) 333-8981.