Do you regularly set goals for your business? There is much research recognizing that if you set and track business goals, you are much more likely to meet or even beat those goals. Success comes with goal setting, establishing sales and operational forecasts and then using that info to make timely decisions and to take timely actions.
If you haven’t really documented your goals, tracked them on an annual basis, or forecasted your sales or operational volumes…well then, now’s a perfect time. Whether your year-end is December 31st, or another time, prepping prior too—even if you’re still busy—or completing during your slowest season, when your recall of the issues is still fresh, is always best. At this time of year, you are normally making that last sales push, and therefore very aware of the numbers, good or bad. So, make some notes, set some dates in the calendar, and take care of this important part of the business.
If you are already well seasoned at setting goals and tracking, you may want to put even more of a focus on it. Not just the annual numbers, but the monthly and weekly one as well. And most importantly, focus on what those numbers are TELLING you. How will this knowledge affect next year and your operational and sales/marketing strategies? As below, look behind to plan forward. If you’re not planning strategically or looking forward when you’re examining last year’s results (i.e. filling for year-end/taxes), then you are just looking at your back end.
Oh, and one thing to know, it keeps getting easier with each month and each year! You become more accurate, efficient, and more effective the more you do it. So, start now!
If you are in start-up mode or in your first year of business, there can be challenges in establishing sales forecasts. Even though your numbers may seem off when first venturing out, setting and tracking sales targets consistently will make you more and more accurate. You want to challenge yourself and your business (team) with your sales forecasts, but you also want to be realistic to better assess outcomes, and category performance is primary. And, despite how many so-called experts will recommend setting high numbers (choosing random 50% increases), consider how many people you know who slow down when sales are good? Most want to blow it away and so should you, and then, at the end of the year, assess “how come?”. So, go for realistic accuracy to better understand performance and where and how you channel your focus for next year.
Dependent on the sector, your processing, and your market area, your first year may not be profitable (many sectors take 3-5 years). But the company might be on track or ahead of schedule! So, don’t only track gross sales or profit, but categories according to industry standards. As you set and track regularly, you start to understand the nuances of setting the forecast. So, even if you are unsure of the numbers, set a sales forecast by category and then track those forecasts and make notes as you see changes or trends. Make it a starting point.
A great resource to gauge where your numbers should be are seasoned players in the industry, other business owners. When you’re setting production or sales numbers, talk to others in the industry. What numbers do they suggest?
If you conduct an information interview and find that local/regional competition doesn’t or will not provide those numbers contact someone on the other side of the province, country, or halfway around the world, that won’t feel the threat. Try to connect with someone in Florida, or Europe, or even Australia, someone in a similar business. Work off percentages and then translate that into Canadian dollars or units.
Many feel that competitors won’t supply information, but one thing that is so terrific about the farm, food, drink industry, is that many are sharing and collaborating because we want to see success in the sector and for each other. So, don’t be afraid to ask.
Go online and look at credible sources. Check with regional and provincial experts and see where they were five years ago. Uncover any information that could be helpful to your own planning.
When you set your sales forecast, keep your goals in mind.
You need to forecast weekly, monthly, and annual numbers for your sales, production, farm yields, etc., but also specific goals that can lead to your success.
Think about the automotive industry for a minute. Many people in car sales think that their goals are for how many cars will be sold in a month. That’s actually the sales forecast. Their goals may be:
Consider what are the things I or the business needs to do that leads to sales success. As high-level coaches in sports say, focus on the process of excellence and that leads to winning games. So, what are your success factors?
KPIs or Key Performance Indicators are exactly that, INDICATORS. They are not monthly or annual top-end goals or sales forecasts. These are the simple things to track processes or sales unit items, things that you can track to get a clear, but estimated, sense of how well the business is doing when it’s busy or slow. A KPI could be related to growing, production, operations, or sales, and when it’s hectic you may think you are too busy to get into things, but it will help you to better understand your business. If you track a few key elements in production or sales, you’ll get a good indication of how you’re doing or whether you need to drill down to focus more on something in your operations, and then you can take action!
For example – in grocery stores, historically they have tracked bread sales. The sales of one SKU (stock keeping unit) of bread can be quite a strong indicator of how the store is going to do in overall sales.
If you are selling at a farmers’ market, or a farm gate, you might want to track heads of lettuce sold or how many people come up on a daily basis? Track how many people you engage. Or how many transactions (because you know your average sales per transaction!).
Think about the things that, as they go, so goes the business. They are not necessarily the top sales items, but the things that really pull customers in.
If your chosen KPI is not looking very good, you drill down to identify the causes and what can be adjusted. If it’s looking really good, you drill down to find out how you can do more of that.
It is critical for you to go through the annual process to review your numbers and determine what they really mean. It will drive how you conduct your business.
For example – if you’re a cheesemaker with twelve SKUs you may get to a point where you feel you’ve spread yourself too thin. You’re confusing your distributors, retailers, and direct consumers with too many choices, or what your brand stands for. By understanding your numbers, you may decide to cut down on the number of SKUs and focus on what you do best, and for the highest margins.
With an annual process, you can study your sales and production. Meet with your team for a brainstorming session to discuss how you can improve on performance. The results can help you affect your sales forecasts and goals.
You will also have to follow through with an Implementation Plan with all the things you need to realize your results. How are you going to make all of this happen?
Doing a SWOT (strengths, weaknesses, opportunities, threats) analysis annually is also a great indicator of where your business is and where it’s headed. To help achieve your goals and forecasts, define your strengths and weaknesses internal to operations, and what your opportunity and threats are that might affect elements external to the operation.
Good luck setting and tracking your results and most importantly, good luck on strategizing and planning forward with those numbers. Like many things, goal setting and forecasting are not complicated but they have multiple layers. We have focused on a few suggestions and areas, so keep it simple at the start and keep evolving and adapting to the learning from the harvest… just like a good farmer. Consider the four seasons of goal setting; set, track, plan and grow.
If you have questions or want help with your business planning, we’re here for you. Contact us and we’ll see where you’re at.
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