The difference between a dream and a plan is that the first simply expresses a desire to be someone or to achieve something, while the second expresses a method for accomplishing the first. If you really want to achieve your dreams, you need a plan or a map that is going to show you how to get from here to there. A good road map for future growth needs to have the characteristics of specificity and realism, just like a good goal. It should also contain benchmarks to measure your progress and tools to measure how well you're doing.
An important part of any growth plan is establishing a way to tell when you have reached important points in the process. These mile markers can be composed of any number of benchmarks. Overall sales revenue is a common one. Many companies recognize the first year they topped $1 million, $5 million and $10 million in sales. Sales is an obvious, important, easily grasped benchmark. You can look at sales growth rates and overall sales volume as valuable benchmarks.
Sales, however, are not the only benchmark. You can also look at benchmarks for such critical variables as number of stores, number of customers and transaction volume. Many industries have benchmarks unique to them. For instance, air carriers think in terms of percentage of seats filled and revenue generated per mile flown. E-commerce businesses measure Web page views and time spent on each page. Your business may be concerned with even more esoteric benchmarks, such as percentage of repeat customers or average sale amount per customer.
Not all benchmarks have to do with growth. You can set benchmarks related to cost savings, error rates, employee turnover and many other aspects of your business. About the only characteristics all benchmarks share are that they should be significant, relevant and measurable.
Establishing Measurement Tools
One of the biggest differences between small companies and large ones is the amount of effort each devotes to measurement. Big firms are famous for generating mounds of reports containing measurements of all kinds of performance data. These reports describing what is happening in a company are handy for enterprises with thousands of employees that may be spread all over the globe but still need to be guided in the same direction.
If you're a one- or two-location venture and you've personally hired all the employees and see them every day, doing a lot of measurement and creating reports may seem like a waste of time. And it probably isn't necessary for small firms to spend as much energy tracking performance as it is for big companies. At the same time, most entrepreneurs go out of their way to avoid paperwork. More so than large company executives, entrepreneurs' decision-making is hamstrung by a lack of adequate information about their companies. Although their intuitive knowledge of their companies may be superior to the grasp exhibited by Fortune 500 CEOs, entrepreneurs could generally do a better job of gathering data about their companies. Entrepreneurs often lack enough data to be able to answer questions such as: What is my most profitable product? What are the traits of my best customers? Which types of promotions have the highest payback?
You will find your growth plan much easier to implement if-along with setting up financing, hiring and other functions to achieve it-you create measurement tools to tell you how you're doing along the way. These need not be overly complex. You need to decide the things that are most critical to achieving your growth objective and then find a way to measure them. If, for instance, competitive pricing is the main thing you feel will determine your fate in the marketplace, you could assign one employee to make a weekly or daily trip to an outlet where your products are sold alongside those of competitors, just to make sure you're not being undersold. It's easy to overdo measurement, spending valuable resources collecting data that isn't useful. But that doesn't mean all measurement is bad.
The value of a goal lies in the way it provides you with a relatively steady, unblinking light toward which to steer in the fog of everyday business life. But that doesn't mean a goal should be as immovable as a lighthouse. You should periodically take a fresh look at your goals to see if they need to be changed or, perhaps, dumped. Changes in your personal situation, such as a desire to spend more time with family, may cause some goals to become irrelevant to your true desires. Of course, the best reason to scrap a goal is because it has been accomplished.
The last thing you need to know about goals is that they are just that-goals. They aren't preordained events that will occur whether or not you work toward them. In other words, just having a goal of reaching $10 million in sales doesn't mean you'll achieve it. Nor should the accomplishment of a goal be considered absolutely necessary to your personal well-being. Some goals are more important than others, but it's not wise to be so committed to a given goal that, if you don't achieve it or it's not all you hoped it would be, you'll be emotionally destroyed. Remember, as that great philosopher Yogi Berra also said, "The future ain't what it used to be."
Excerpted fromGrowing Your Business