How Setting Targets Drives Your Business Performance

It’s important to know WHY you’re in business, and to have crystallised that core vision for your company. But once you’ve pinned down that vision, the next step is to set objectives that will drive you towards achieving your aspirations for the business.

We’ve outlined 5 key steps for setting meaningful targets for your business – with advice on how this improves your overview of business performance, scorekeeping and long-term success.

1. Set a long term vision for the business

Every business, no matter how successful, starts with an idea. You might have come up with the next killer app, or the future of high-street retail, but the first step for any enterprise is to to check that your business idea is roadworthy.

With your core business and financial models put through their paces and proved to be viable, you can start setting up a long-term vision for the business, with the associated goals and objectives that will support this.

• Define your goals – get the objectives of the business down on paper, so you know exactly what you’re working towards over the next 6 months, 12 months and beyond.
• Set clearly defined monthly targets – decide on monthly targets for key areas such as sales, customer retention, monthly revenue or profit margins. Aim high, but make sure they’re attainable and not just a ‘pie in the sky’ figure.
• Focus on performance against these targets – once these targets are set, regularly track and review how you’re performing against them and take action if you’re missing the bullseye by a mile.

2. Drive performance and provide momentum

It’s easy to lose sight of your core vision and goals when you’re up to your ears in the day-to-day minutiae of dealing with customers and keeping the business running.

With key targets and scorekeeping in place, there’s an ever present reminder of how well you’re performing. That helps you, as the business owner, to step outside the everyday elements of the company and remind yourself of the need to drive things harder.

• Provide momentum for your business model – measuring yourself against a target acts as a driver, pushing you to get more out of your team and resources.
• Focus on improving your results – with monthly numbers to review and analyse, you have the ammunition to tackle any shortfalls and get proactive about improving results.

3. Help to keep your team engaged and motivated

Unless you’re a one-person start-up, you’re going to have a team of people working with you to drive the business forward and meet those pre-agreed monthly targets.

Performance is inextricably linked to engagement levels in your team, and that means there’s a real imperative to keep your people motivated and in tune with the underlying business strategy.

• Share your monthly numbers with the team – be transparent about how the business is performing, and share your key targets and metrics with everyone in the company. When people feel involved in the business, they tend to be more productive.
• Set targets that push people to do more – when setting target numbers, take people out of their comfort zone and give them goals that push improved performance. But remember to choose realistic targets – constantly missing a target is bad for morale.
• Give the team individual targets – as part of your performance reviews, set specific personal targets for team members to achieve – and tie these into the core goals of the wider business, so each person sees where they’re adding value.

4. Use technology to measure performance

With a modern cloud accounting platform like Xero at the centre of your business systems, it’s incredibly easy to record, track and measure key areas of performance.

A Xero system brings you real-time data that can give you completely up-to-date numbers on performance against your targets and key performance indicators (KPIs).

• Access your performance numbers 24/7 – Xero works in the cloud, so wherever you are, you have round-the-clock access to all your performance numbers.
• Run detailed reports around key metrics – Xero allows you to customise your coding, accounts and reporting to bring you detailed and customised performance reporting.
• Use cloud forecasting to predict future performance – There are huge number of cloud forecasting apps and solutions that plug into Xero and let you extrapolate your target metrics and business performance forward in time.

5. Work with an accountant who understands your goals

Having a helping hand from the technology to improve your target-setting is a real bonus. But to truly get in control of goals, KPIs and performance management, it’s important to work with an accountant who guides you along the right path and helps you understand the potential pitfalls that inevitably will come along.

This is is the benefit of investing in a forecast model that reflects the core drivers in the business, and partnering with an accountant who’ll work with you to navigate you through the journey. Monthly scorekeeping and performance reports are all part and parcel of our approach here at FD Works.

Many businesses go wrong with target-setting, either by setting unrealistic, unachievable goals, or by not tracking and measuring performance against those targets. By working with a cloud-based accountant, you get all the efficiencies and number-crunching power of online financial technology, paired with a business adviser who’ll work with you to ensure you make the right financial decisions going forward.

So, if you’re looking to put more impetus and drive behind your business, come and talk to us and let’s start setting the right targets to drive your business performance.

Who are FD Works?

Based in Bristol and Bath, our team of accountants and business advisors provide a growing list of clients across the UK with hands-on finance support and FD-level strategic advice.