How To Set Sales Goals That Make Sense

What are your company's sales goals?

You have some, right? Ok, I am going to go out on a limb here and say you do have a sales goal for your business. If you don't, no problem. I am going to explain to you how to set sales goals that make sense.

For those of you who do have a sales goal, how did you arrive at that number? Was it based on past or current performance? What you have seen others achieve? What you thought sounded good? Something else?

I'll be totally honest. When I set the revenue goals for our gym, it was driven by nothing more than ego. In fact, in the beginning, it wasn't a revenue goal at all, it was the total number of clients. I figured when I hit 100 clients I'd be golden, never even taking the time to think what that actually meant revenue wise for the business. Or even more importantly, for me. (Yeah, I like to eat too). 

how to set sales goals that make sense

It wasn't until I actually got to the "cord-cutting" stage until I considered it. In other words, I had been working another job that I relied on to pay the bills. I knew my take home and what I was making from that job. But how does that translate to the business? After all, $10,000/mo in revenue didn't mean I was going to be shoving $10k into my pocket. But what did it mean?

And that's where Lifestyle Congruence comes in. Fancy term, simple concept.

All it means is "How much does the business need to be generating for me to take home what I need to?"

In reality it's probably the simplest of all the Fix This Next questions to figure out. But that doesn't mean it's going to be easy.

First you need to figure out the personal income you need to support your personal level of comfort. This is a need based number, not necessarily wants - not yet. For instance, when I calculated this number, I found I actually needed less than what the old job was paying me which meant my goal could be lower.

After you have calculated your personal income number, you need to know how much business sales income you need to be able to do that. Here's an example:

You find that your personal comfort number is $5,000/mo - a nice round number. 

Then you calculate how much you are paying yourself as a percentage of your business sales income. 

Let's say your current revenues are $10,000/mo and you are paying yourself $2,000/mo.

That means your Owner's Pay% is 20%. (($2,000 / $10000) x 100%)

So to pay yourself $5,000/mo at that percentage you would have to generate $25,000/mo in sales revenue ($5000/20%)

$25,000/mo = $300,000/yr. You now have a sales number that is congruent with what your personal lifestyle number is. It is a realistic calculation of what your sales goal needs to be. Not a guess, or a hope or a dream. Real Life.

And of course that number can be adjusted and modified. Think of what can happen if you run your business leaner, and now can pay yourself 25%, or 30% or more? That is where the magic happens.

But you gotta know your numbers first. We have the tools and coaching to help you make that happen. Let's talk about it.

how to set sales goals that make sense

Shannon Simmons

Shannon has been consulting with small businesses for over 10 years. After 2 years in public accounting she saw a need to work for small business owners to teach them how to grow financially healthy businesses. She has built on her Master of Accountancy degree from Manchester University by becoming a Certified Profit First Professional and a Certified QuickBooks ProAdvisor. When she’s not meeting with entrepreneurs or assessing their businesses, she enjoys time with her husband and 2 children serving in their community, playing and watching sports, marveling at nature or reading a good book.

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