Everyone is told they need to set goals. Whether they are for personal or business reasons, the important thing (aside from having goals) is to have a way to track performance against those goals – measuring performance is the only true way to know if improvement has been made. To be meaningful, goals need to be specific, measurable, attainable, relevant and timely.Recently, I was having a conversation with the owner of an IT service company about his business plan for the coming year. In spite of the uncertainty in the economy he expects his business to grow and he hopes to be more profitable than last year. When I pressed him for details on how he was going to achieve this he said he was going to sign up more customers, cut expenses and improve his engineers’ productive time.

So I worked with the owner of the IT service company to create specific objectives that could be monitored individually and together would allow him to achieve his overall goal. We came up with the following three main goals:

Goal 1:
Increase revenues by an annual rate of 18%. At his present size, he would need to add two new clients per month at an average of $1,200 per client per month to achieve this.

Goal 2:
Keep annual expense growth to 15%. Since his previous year expenses had an annual growth rate of 25% he wanted to reduce overall expenses by 10% for the year.. I reminded him that he needs to watch this carefully because if expenses grow at the same rate as revenue there is no increase in profitability and that 3% difference in revenue growth does not leave a lot of room for error.

Goal 3:
Increase billable hours by 5%. Through the use of improved scheduling and remote access. Since the majority of his clients are on hourly billing arrangements this was a relevant goal. He is exploring how to transition his business model to monthly service fees for clients in the coming year.

Of course we had to do some number crunching to make sure these goals were attainable so he could achieve the desired result. But, like many other small business owners, he had been managing his business using instinct, past experience and monthly reports from his accounting system. We plugged in the Corelytics Financial Dashboard to simplify the process of tracking and monitoring his progress toward the goals he set for his company. Now he has a solid plan for the future and the tools in place to stay on course.

Make sure you are not only declaring goals for your business, but that you have a way to measure your performance on a regular basis throughout the year.