Clear Goals Pave Way for Results

Q: In order to grow our business I need to set some goals. What advice can you provide on the goal-setting process?

A: Goals are important to all businesses. They help focus your employees on achieving results important to the business. Careers and compensation are often linked to the level of goal achievement. But, if goal- setting is not done right, it can undermine the best companies.

The first step is to collect and analyze key data that relates directly to your customers. Learn from your past performance. Do your market research. Clearly state your needs and ensure everyone agrees that these really are needs. For instance, your need might be to fill some key, specific, open positions in your sales group.

Goals should inspire and guide action. If they are not clear and accurate, their purpose becomes blurred and they cease to be something you want to accomplish. Define them so well that employees know where the start and finish lines are located.

The specifics must be measurable. If not, you will not know where you are or whether you have finished. Your goal might be to hire 10 experienced sales employees between now and the end of the year.

Are your goals doable? They can be a stretch but employees need to know the reasons a goal is achievable.

The building blocks of goal-setting need to be logical and understandable.

Business owners should realize that not everyone may share their level of extreme commitment. Sure, top performers are often inspired by stretch goals. But goals that are clearly beyond a reasonable expectation of success are even worse than too-easy goals - they can actually damage your company's energy.

Goals need to be consistent with other current or envisioned goals. If not, retool before setting your goals in concrete. For instance, you might have a goal of increasing sales by 25 percent, and that's why you need the goal of increasing your sales staff.

Make goals your servants and not your master. It's important to strive to reach your company's goals, but if obstacles occur, treat them as learning opportunities and then make adjustments. Expect learning to be a major benefit of working to achieve goals.

Advice for setting your prices

Advice for setting your prices
Published in the July 5, 2015  in  

Q: My prices don't seem to be competitive. What should I do?
 
A: Setting prices for products and services should be simple - cover costs, make a profit and appeal to customers. But there are more variables to the pricing formula than many small-business owners may realize.

"When you're starting out, you may not have a good handle on all the costs you'll incur," observes Janet Attard, founder and owner of BusinessKnowhow.com. "Unless you have previous experience estimating jobs in the same industry, you may have difficulty making accurate estimates of the time and/or materials needed to complete jobs. You also may not account for non-billable hours - the time you spend marketing and Other costs of doing business may also be overlooked, until you have to pay them. These include payroll and self-employment taxes, fees for accepting credit cards, health insurance and other benefits, and a variety of overhead expenses.

Yet even after all those costs are accounted for, a seemingly fair price may not gain traction with customers.

"Prices are market-driven, not cost-driven," former executive and veteran SCORE Houston mentor Raj Mashruwala explains. "It doesn't matter what your costs are because the market doesn't care. What matters is if you can make a profit at a price the market will bear."

Mashruwala also recommends researching online industry benchmarks for gross profit margins. He also cautions new entrepreneurs to avoid the frequent mistake of underpricing their products and services in order to lure customers.

"Rather than getting a toehold in your business, you're actually giving competitors an advantage, because there's no way you can survive for the long term and meet your clients' expectations by pricing under the market," he says.

Attard also says, "Discounting can lower the perceived value of the product or service, or make the customer think you lack the experience or resources to do the job. If you underestimate costs, or overestimate sales volume, the outcome will be reduced profits or a loss."

Once you do establish a reasonable pricing structure, make it a point to review it several times a year. Customers and competitors are watching pricing trends, so don't risk being left behind.

A good place to go for more information on product and service pricing is www.score.org, click on the Marketing tab and then Price Strategy, where you will find online webinars presented by SCORE volunteers with expertise in this area..