You’ve used data to set your goals for 2022 and now you’re excited about the opportunity to make them happen.
How are you going to do that? Take advantage of the data you have. Data helped you establish your goals in the first place and you can use data to ensure that you achieve them.
Two Data Types
As you set your goals and track them, you should be looking not only at your own historical numbers but also those of your competitors.
Historical Data
These numbers tell you how you’ve performed in the past. They include such things as revenue, new customers added, and customer retention. If, for example, your customer base grew by 10 percent last year, you might have a goal of growing it by the same percentage this year. Or you might have set a “stretch goal” of 15 percent customer growth.
Competitor Data
Your business doesn’t operate in a vacuum. If you aren’t matching or beating the numbers of companies your size in the same line of business, you’re at risk of falling behind. If your rival’s customer base is growing by 20 percent a year, 10 percent for you may not be good enough. Meaning it will benefit you to keep tabs on their data as well.
How To Connect Your Data To Your Goals
In order to leverage data to achieve goals, there are several steps to follow.
Review Your Data
It’s hard to know where you’ll go if you don’t know where you’ve been. The first step is to look at key numbers both within your own business and your competition.
How many customers are you adding and retaining? What are your revenues by month and by quarter? Are expenses in line with revenue growth? Which of these numbers need to be maintained or improved to grow your business?
The answers tell you what areas your goals should address.
Set Goals
Now that you’ve identified where to focus, it’s time to set goals. Always make your goals SMART. That stands for specific, measurable, achievable, relevant, and time-bound.
- Specific. “We will add many new customers” is too vague. Try setting a specific number of customers or a percentage increase.
- Measurable. To know if you’ve reached the above goal, you have to be able to track which sales are to new customers. You should monitor it on an ongoing basis throughout the year.
- Achievable. Is it realistic to double your customer base in 2020? Depending on your line of business, maybe. Don’t set goals that are too far out of reach.
- Relevant. If new customers mean more revenue, attracting them is a relevant goal. However, if increasing sales to existing customers is more profitable, consider adjusting your goal to be more relevant to your needs.
- Time-bound. Track progress against your goal on a monthly or quarterly basis. If your business is seasonal, you might vary interim goals to take this into account.
Track the Right Metrics
The metrics you track should support the goals most important to your company.
Let’s say you’ve experienced cash flow issues in the past and you want to improve this area. Relevant metrics include numbers such as:
- Budget variance
- Costs of goods sold
- Timeliness in collecting accounts receivable
Furthermore, your entire organization needs to understand these goals and be on board with them. When a goal is aligned with business success and everyone understands why, your whole team will work smarter at the things that really matter.
Check-In Often
If you set your goals at the beginning of the year and don’t refer back to them until year-end, you don’t give yourself the best chance of meeting them. Collect and review the data throughout the year to know whether you’re on track or if you need to make adjustments.
It’s good practice to revise a goal either higher or lower if the business environment varies from what was expected. Most goals should be checkpointed at least on a quarterly basis, and monthly isn’t too frequently for companies in a dynamic line of business where rapid change is the rule.
Work with a Trusted Accountant
It’s a challenge to sift through all the available data and identify what’s most relevant to your organization. You can be diligently monitoring your progress, but if you’re not focusing on the right goals or using the right metrics, you may be missing your best opportunity.
That’s where a trusted accounting partner comes in. They can look through your books and help you identify areas for improvement and outline areas you’re doing well. They’ll also have a perspective on your competitors you may not have the bandwidth to develop.Pasquesi Partners is an accounting and financial management firm that has helped numerous startups like yours use data to set and achieve their goals. Contact us today to learn how we can help you reach your goals!