Philip Campbell's Blog

Putting an “Upper Bound” on Your Business Goals

I’m a huge believer in the power of goals. Both personal and business goals.

Goals are at the driving force in what Earl Nightingale refers to as The Strangest Secret in life:

“You become what you think about most of the time.”

In short, you become, or create, what you think about (what you focus on) most of the time.

When you combine a burning desire to achieve a very specific goal in your business with intense focus and attention, you create an almost “magical” force that works to make your goal a reality.

The Monthly Financial Rhythm of Business

Setting goals and targets is an integral part of the Monthly Financial Rhythm of business. There is a natural rhythm to business and money. And goals and targets help you get into the natural rhythm of improvement that is necessary to maintain and grow profitability and cash flow.

The Monthly Financial Rhythm, when implemented well, is one of the most powerful processes I have discovered for driving financial health, wealth, and freedom in business.

Putting an “Upper Bound” on Your Business Goals

Paul Jarvis, the author of the book Company of One, has an interesting perspective on setting goals in your business, especially when those goals impact your growth trajectory.

Here is a quote from the book:

“Most businesses set goals and targets, but few consider having an upper bound to them.

Paying attention instead to the lower bound of a goal, they focus on ever-exceeding increases in areas like profit and reach and set goals like, “I want to make at least $1 million this quarter,” or, “We need to grow our mailing list by 2,000 people per day.”

They set the minimum threshold they want to reach, with the implication that if more happens, that's even better.

What if we set upper limits to our goals instead? For instance, “I want to make at least $1 million this quarter, but not more than $1.4 million,” or, “We need to grow our list by 2,000 people per day, but not more than 2,200”?

In most areas of business, there's a magic zone for sustainability that relates to the concept brought up at the start of this book about having “enough.” If growth happens too quickly, problems can arise like not being able to hire fast enough to keep up, or not having enough infrastructure to handle increased volume.”

This is an interesting approach to consider as you set goals and targets in your business.

Especially when you are growing rapidly and need to make sure you are growing wisely.

 

NOTE: You can grab a copy of my newest book at Amazon.

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.

Growth is Not Always Necessary

Here is a great perspective on growth from the book Company of One by Paul Jarvis:

“It's assumed that hard work and smart thinking always result in business growth. But the opposite is often true: not all growth is beneficial, and some growth can actually reduce your resilience and your autonomy.

In truth, embracing growth appears to be the easier route more often than not, since it's easier to throw “more” at any problem that might pop up.

Want more customers? Hire more employees.

Need more revenue? Spend more.

Fielding more support requests? Build a bigger support team.

But scaling up might not be the best or smartest solution to the basic problem. As a means to generating higher profits, what if you acquired more customers simply by creating more efficiency, so you didn't have to hire more people?

What if you generated more revenue by finding a way to spend less (again, for higher profits)?

Growth, in the typical business sense, isn't always a smart strategy if it's followed blindly. Much of the research reported in this book will strongly suggest that blind growth is the main cause of business problems.

It can leave you with an unmaintainable number of employees, unsustainable costs, and more work than hours in a day. It can force you to lay off employees, sell your company at a less than optimal price, or, even worse, close up shop completely.

What if you worked instead toward growing smaller, smarter, more efficient, and more resilient?

You can scale up revenue, enjoyment, raving fans, focus, autonomy, and experiences while resisting the urge to blindly scale up employee payroll, expenses come and stress levels.”

Improvement is the Goal

Growth is sexy and looks on the surface that it will solve lots pf problems.

But improvement is really the goal in business.

Improving your product or service. Automating routine tasks to improve accuracy, reliability, and reduce costs.

Improving the quality of your customer base by routinely pruning problem or unprofitable customers.

Sometimes it is wise to look inward for ways to improve your business before looking outward to grow at all costs.

 

NOTE: You can grab a copy of my newest book at Amazon.

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.

Your Personal Balance Sheet

I am a huge fan of having a strong balance sheet in business.

It provides cushion against surprises. It is an indicator of strength to outside investors. It protects the owners of the business from the normal (or surprise) ups and downs inherent in every business.

I am also a fan of having a strong personal balance sheet (a strong personal net worth).

But the two balance sheets are very different… they serve you in very different ways!

“A traditional business’s goals and management focus are far different than those in our personal lives. For example, a business does not need to “live” off its balance sheet for thirty years in retirement.”

Joseph Galatowitsch and Chris Engstrom, Manufacturing Wealth

I love that quote from the book Manufacturing Wealth. It points out that it is even more important to have a strong personal balance sheet because it’s your personal balance sheet that will provide the money you need later in life to live comfortably.

What a shame it would be to work so hard in your business only to realize later on that you created a weak personal balance sheet (a weak personal net worth) that can’t support you later in life.

A good first step toward setting targets, setting goals, for your personal net worth is to jot down what your personal net worth is today.

Then consider whether you like the number you see.

 

NOTE: You can grab a copy of my newest book at Amazon.

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.

Putting a Number on Your Net Worth Goal

The path to “having money” is creating (growing) a strong net worth. Both personally and in your business.

Do you have a goal for what you want your net worth to be?

Do you know what your net worth is today?

Would you like to have a net worth of:

• $1,000,000
• $5,000,000
• $10,000,000
• $50,000,000
• … or more? 

Take a couple minutes today to ponder what your net worth goals are (or should be).

It might change the way you manage the financial side of your business… and the way you manage your money personally.

 

NOTE: You can grab a copy of my newest book at Amazon.

A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter business decisions. Order the book at Amazon.