Clear Business Objectives Are Vital For A Successful BusinessKathy Ennis27th May 2021
Does the idea of planning and setting measurable business objectives for your freelance or side hustle business scare you?
Planning can seem frightening, because when you’ve got a plan, you’ve got more than just a vague idea. You’ve got something real and measurable to work towards. Something that tells you whether or not your business is a success.
In my experience as a business coach and mentor, this is exactly why so many people are scared of planning!
Business Objectives vs Self Belief
They worry that they might not achieve everything they’ve set out to do. They also don’t truly believe they will achieve it!
And then what?
As a business mentor who specialises in supporting freelance, solopreneur and side hustle businesses, I can tell you that running a business by yourself can heap on the pressure you feel to get everything right.
After all, working for yourself isn’t like working for a faceless corporation, where everything gets swallowed up in the machine. When you’re the only one in charge, there’s nowhere to hide from bad business ideas!
But I’ll let you into a secret: failure is a good thing. Every top entrepreneur knows that we need failure to succeed, because it’s how we learn and become better next time.
Success is not final, failure is not fatal: it is the courage to continue that counts
Why Your Own Self-Worth Means More than You Think when Setting Business Objectives
Do you really believe you’ve got what it takes to be successful? I mean, do you REALLY believe it?
From my experience working with freelance and side hustle business owners (not to mention years of running a solopreneur business myself!) I understand the importance of mindset. Specifically the mindset around your own self-worth. This can have a major impact when it comes to setting the right objectives – or any objectives – for your business..
If you don’t believe that you’ve got something other people will want to buy (and buy it from you), then it doesn’t actually matter whether you have or not! Your lack of self-belief will prevent you from setting objectives that will lead you to the right customers.
I once worked with a cake maker who priced her products purely on what she thought people might pay for a cake. Rather than pricing the ingredients and other costs so that she knew, exactly, how much each cake would cost her to make.
When we sat down and looked at her figures, we discovered that she was making a loss on every cake she made!
In this case, she was scared to properly price her cakes. Her thought process? If people refused to buy them for what they actually cost, it meant they were ‘rejecting’ her. Our work together as mentor/mentee did involve practical business advice and guidance; but there was also a lot of mindset and self-worth work in this case too.
Business isn’t complicated; more often then not it’s simple maths.
Example: If your average customer spend per month is £200, then to make £2,000 every month you will need to find ten customers.
As I said, a very simple calculation. However, if you don’t believe that you will be able to get ten customers, you might be tempted to aim lower or not aim at all.
Or it could be that you have a fantastic idea about running an all-inclusive retreat, yet you feel nervous about asking people to pay what it would cost.
(But what if some people were ready and willing to pay?)
How to Start Setting Realistic Business Objectives and Goals
First, a few definitions:
- Objective: this is the top-level description of what you want to achieve, for example, more customers
- Goal: goals break down the objective into time-specific, measurable outcomes, for example, those ‘more customers’ becomes ten more customers
- Action: once you have a set of measurable goals, you need to work out how you are gong to achieve them. Then you need to create a list of actions you will take. So, what will you have to do to get those ten more customers?
- Attend 5 networking meetings in the next 2 months
- Host a webinar in 6 weeks time
- Create a special offer and promote it over the next 8 weeks
- Post regularly on Facebook for the next 4 weeks
- etc. etc.
A good place to begin with objective and goal setting is by looking at your financial targets. If you know how much your business – and your life! – costs, then you will need to set objectives that mean you can afford them!
Here’s a simple example:
Your business costs you £750 a month to run and you pay yourself £1,250 a month. You currently turnover £2,000, but you want to invest in a new website and pay for some business mentoring support. So, you will need an extra £500 per month. You have 10 customers and your current, monthly customer value (i.e. the average you take monthly from each customer) is £200.
Let’s see how this turns into an objective, goals and actions:
Objective: Increase monthly turnover
Goal: Increase monthly turnover by £500 to £2,500
Now there are a few ways you can go with the Actions; you can approach them separately, or in combination. For example, you could introduce a number of actions that would bring you more customers. In this example you would need 3 more customers spending an average of £200 each to bring you the £500+ you need.
Another option (or maybe, an additional option as there’s nothing stopping you doing both!) would be to increase the value of each customer sale. You could do this by encouraging current customers to buy more, or you could increase your prices.
In this example, if you did a combination (which i would always recommend), it could look something like this:
Increase your prices by 10% – this would make the average income from each customer £220, so your 10 customers would bring you a total of £2,200 per month. Annually, the difference would be an increase in turnover from £24,000 to £26,400.
Now you only need to make another £300 to reach your £500 a month target
Create a new product or service – something your current customers have been asking for; something low-cost, maybe £15 a month. Even if only seven of your current clients buy it, you’ve made another £105 per month. If we look at the annual turnover to include this increase you would move from £24,000 to £28,200.
Now you only need to make another £195 to reach your £500 a month target
Get one new client – we always think this should be our first step, but getting new clients is seven times harder than it is to get clients who but from us already to buy from us again.
I usually recommend my clients to make this a final option.
In this scenario, one new client would bring in £220 per month (remember, you’ve put your prices up and maybe they’re not ready to go for your £15 a month add on).
Now your monthly turnover would be £2,525 and your annual turnover would move from £24,000 to £30,300
Three things have happened here.
- One simple objective has been set
- A measurable goal has been identified
- Specific actions have been created
This example shows that small increases, low-cost items and one extra client can add £6,300 per annum to this business.
If you need to know how to do this in your business, book a Breakthrough Session today
The Importance of Understanding Your Market
Once you’ve looked at your financial targets, it’s time to take a closer view of your market.
In other words, you’ll need to make sure your business objectives and goals are the right ones to attract your ideal customers.
You can use the four Ps to help you on your way: Product, Price, People and Promotion.
All four of these Ps need to be in alignment when you set your business objectives.
For example, if you’ve got the right Product and it’s the right Price but you’re Promoting it to the wrong People, you will find it virtually impossible to achieve your goals.
A common mistake freelance and side hustle business owners make, particularly in the beginning, is blindly marketing their products or services to the people they usually mix with. Targeting people they know from regular networking events, or friends of friends.
A more successful strategy would involve finding and targeting the people who would most benefit from your product or service. This may mean casting your net wider, such as contacting new people on LinkedIn, or running a targeted marketing campaign.
Do You Know Where You Will Be Five Years from Today?
I’ll be taking a more in-depth look at micro and side hustle business objective and goal setting in my next post. Meanwhile, my Five Year Timeline will help you set out your intentions, and ensure you can come up with a clear business plan that fits in with your life.
Have you got any stories or comments to share about business planning? Feel free to post them below, and let’s start a conversation.