How Do I Build the Goal with the Business?

The short answer is that you should reverse engineer your business goal starting with the amount of money you want to make. By working backward from your target revenue, you can determine clear, actionable steps such as increasing your average transaction size and figuring out how many jobs or sales you need to reach your goal. This approach turns a big, abstract goal into a concrete plan.

Full Explanation

Building a business goal effectively involves breaking down your ultimate financial target into understandable and achievable components. Instead of guessing what needs to be done, you start by specifying how much revenue you want to generate within a certain timeframe. This allows you to then analyze other important factors, like your current average ticket size, and what adjustments are necessary to meet your performance targets.

For example, if you want to grow a business that makes $10 million in annual revenue five years from now, you must consider what that means in terms of sales volume and pricing. It’s not just about saying “I want $10 million,” but rather understanding the specifics behind reaching that number.

Step-by-Step Breakdown

Define Your Revenue Goal: Start with a clear target, such as $10 million in annual revenue within five years.
Assess Your Current Average Ticket: Identify the average value of the products or services you sell now, for example, $500.
Plan to Increase Ticket Value: Decide how you could increase this number to a higher figure like $2,000 or even $10,000 to help meet your revenue goals more efficiently.
Calculate the Number of Jobs or Sales Needed: Divide your revenue goal by your planned average ticket price. For instance, $10 million divided by $10,000 equals 1,000 jobs per year.
Make the Goal Tangible: Understanding the specific number of jobs or sales makes the larger goal seem more achievable and gives you a clear target to aim for in your daily business activities.

Real Examples

Suppose you currently sell services averaging $500 each, and you aim to generate $10 million annually in five years. If you keep the same ticket price, you would need to complete 20,000 jobs annually, which could be overwhelming. However, if you increase the average ticket size to $2,000, the number of jobs needed drops to 5,000 annually. Increasing your ticket to $10,000 further lowers the necessary jobs to 1,000 a year. This approach helps you understand the trade-offs between pricing and volume, aligning your goals with realistic strategies.

Common Mistakes

Failing to start with a clear revenue target can make your goal vague and hard to measure.
Ignoring the average ticket price prevents you from knowing how many sales are required.
Setting goals without breaking them into actionable steps, like increasing ticket size or calculating sales volume, often leads to unattainable or confusing plans.
Not regularly revisiting and adjusting your goals based on progress and market changes.

FAQs

Why is it important to reverse engineer my business goals?: Reverse engineering helps break down large revenue goals into manageable steps, making planning more precise and achievable.
What if my average ticket size can’t increase?: If your ticket size remains constant, you will need to focus on increasing the number of jobs or sales to reach your revenue goals.
How often should I reassess my business goals?: Regular reassessment, such as quarterly or annually, helps ensure your goals remain realistic and aligned with your business performance.

Key Takeaways

Start with a clear revenue goal for your business.
Understand and plan to adjust your average ticket price to make reaching your goal more feasible.
Calculate the necessary sales volume based on your revenue and ticket size.
Breaking down large goals into specific actions makes them more achievable.
Use this reverse engineering method to maintain focus and clarity in your business planning.