How to Set BIG and Realistic Goals (Transcript)
If you can relate to this struggle between modest “realistic” goals and ambitious inspiring goals, then today’s podcast episode is for you.
Because here’s the truth: there CAN be a balance between those two extremes. And not just a compromise… you can actually set goals that are both realistic and inspiring.
This is a transcript of Work Less, Earn More, Episode 52. Listen to the episode here.
We became entrepreneurs because, more than anything, we want freedom. We want to be in control of our own schedule, income, and life. But unfortunately, that isn't always the reality of being a business owner. I'm Gillian Perkins, and I'm on a mission to take back entrepreneurship for what it's supposed to be. In every episode, I'll share with you how to get the most out of every hour you work so that you can work less and earn more. Let's get to it.
If we're going to talk about goal setting, the first thing that we have to get on the same page about is that we cannot be setting goals based on average. We can't be setting goals just because everybody else is setting those goals. We can't say we want to run a marathon just because that's the popular thing to do, or we want to make $1 million. Because first of all, those goals won't really be very meaningful to us because they won't be personal, and we won't feel very motivated to achieve them. So if we set very big but very standard goals, then we won't have the motivation to do the work that's required to hit those big goals. Or, if we set small goals, we also won't have the motivation and we won't be very satisfied by the results when we get them.
And second, because if we set average goals, the same goals everyone else is setting, then those goals are going to be average. Who wants to set average goals? Don't you want to set goals that you are actually excited about? Goals that are actually exciting, and interesting, and challenging? That's really the thing. Goals are going to be more exciting, and more motivating, and more meaningful if you make them a little bit challenging, and if achieving them would be a big accomplishment for you.
Now, if you've ever read a book about goal setting, or you've ever attended a goal setting workshop, or been guided through a goal setting exercise, oftentimes you're advised to set a big goal. Dream really big, don't play small. People will ask you, “How much money do you really want to make? What are you really trying to achieve? If you could do anything, what would you do?” They tell you to make these really big goals. Personally, I've always struggled with this because as soon as someone asks me how much I want to make I think, “Well, as much as I can.” I think that a lot of people feel the same. Sure, they could make a very reasonable, realistic goal but that's boring, so then when they're challenged to set a big goal they're not really sure how big it should be. And then, what a lot of people do is they set a very arbitrary big goal. And they say something like, “I want to build a $1 million company.” Or, “I want to hit eight figures.” But really, it's very arbitrary.
How to Set Goals
How can we avoid these big, arbitrary, meaningless goals? Well, here's how. We set goals based on math. Now, if you're not a math person, don't worry. This isn't going to get very complex at all. We're going to be doubling and tripling a few things, and that's about the extent of it. But, it's going to make a big difference. There are two different ways that we can achieve goals based on math. The first is using formulas to predict realistic outcomes. And second, to use multiples of current results. Let me explain what each of those two things mean.
First, using a formula to predict realistic outcomes. This is where you look at what you're currently doing, and you construct a model of how your business is making money. When you look at your model, you can plug different numbers into it. For example, you could plug in the number of new customers that you're getting every month, and then the average value of your customers, to calculate your average profits. Now, that's a very simple example and if you want a lot more detail on exactly how to use these formulas to predict your current profits, then I have a workshop that I put together. It walks you through that entire process, it's about 20 minutes long. You can find it at gillianperkins.com/predict-your-profits. That's gillianperkins.com/predict-your-profits, with dashes in between each of the words. I'll also leave a link to that in the show notes.
You can learn exactly how to construct a model like that for your business, how to use it to predict your profits, and how to use it to figure out which levers to pull in your business to really increase your profits, as well as how to run a profit projection for the next year. That's the first way that I want you to use math when you're setting the goals. First, you need to figure out what's going on right now. But then, beyond that we're going to use a little bit more math to figure out what the goals themselves should be.
Predict Your Profits
This is where we're going to use those multiples of current results. For example, let's say that this year you are going to earn $40,000. For example, let's say that last year you earned $40,000 and you're trying to set a goal for this year. What should that goal be? For most people, I would recommend that you set a goal that is double what you achieved in the previous period. So if you earned $40,000 last year, a good goal for this year would be $80,000. I'll just give the caveat here that this is true if you're building an online business. If you are working a nine-to-five job, obviously you can't expect to double your income year after year. And also, if you're building a more traditional brick-and-mortar business, then it is much more common to see an increase of five or 10 percent, not an increase of a full 100%, which is what doubling is.
Now, if you are really motivated and you have a lot of time and energy to devote to the goal, then you certainly can go for a bigger multiple. You could three times, or five times, or even 10 times your last year's results. If you earned $40,000 last year, then you might go for $120,000 this year, or for $200,000, or $400,000. But at that point, they are really stretched goals, they aren't very realistic. In order to hit those goals, you're going to need to have a really good proven strategy, and you're going to need to hope that nothing terribly random upsets your plans. That's of course not to say that you shouldn't shoot for those really big goals. It's just to say that you'll need to have everything on your side if you actually expect to hit them. For most people, setting a goal of doubling their previous period's results is a big enough goal to be very motivating, to be very interesting, and exciting, and very worthwhile.
Now before I go on, let me just clarify that the reason I'm saying the previous period is because if you earned, say, $2000 last month, then your goal for this month could be $4000. However, the shorter the periods get, the more difficult it will be to double. It's easier to double a whole year's results, going from 40,000 to 80,000 then it can be to go from 20,000 this month to 40,000 next month, just because you don't have a lot of time to make that big leap. I'll also mention that, of course, the bigger these numbers get, the more difficult it can be to double overall, just because the systems get a lot more complex.
Okay, so now let's take a minute to talk about what you should do if this doubled goal feels a bit overwhelming. Let's use that example I gave before. Last year you earned 40,000, your goal for this year is 80,000. But, you have no idea how you are going to earn 80,000. Well you can break these goals down really simply, and make them a lot more manageable and less overwhelming, if you just focus on improving by 10% each month. For the sake of easy math let's say that last year you earned $36,0000, so $3000 per month. This year, in the first year of the month, you want to earn 10% more than that so you want to earn 3300. And then the next month after that, you want to earn 10% more, so a total of 3630. The month after that, 10% more would be $3393. You can see how this is a very incremental increase, but it's going to lead you to, by the end of the year, earning the amount that you need to be earning per month to earn $80,000 in a year.
Okay, now you understand a good, realistic, math-based method for calculating what your goals should be in order to be both big and realistic and attainable. But, what should you do if you're just starting out? I get this question a lot. People who are just starting their first business for the first time, or even their third business. But, they're just starting at ground zero and they have no idea what a realistic goal is. And, with good reason. You really can't know how much you are going to earn from a new business when you're just starting out, and you don't even have a proof of concept yet. Now of course, you can still do profit projections, just like I cover in the Predict Your Profits workshop that I mentioned earlier on, and that can be a useful thing to do. But, it's going to require a lot of guesswork, and it's not going to really be based on fact. You won't really know what you or the business is capable of until you get out there and actually start taking sales.
For that reason, I think that a much more meaningful, and certainly realistic goal is simply to earn your first $1000. Now no, that is not a ginormous, super exciting goal but, when you understand how meaningful it is, I think that it can be exciting and it is a very important goal. Until you start actually making money, you don't really have a business, you have a business idea. This first $1000 is very important because it's what means you're actually in business. But, even beyond that it means that your idea has been validated. You now have a proof of concept. You know that people are interested in paying money for this product that you're selling, and you know that you have a way that you can market it that will convert people into buyers. Your marketing messages are basically on track if people are being converted by them.
Now of course, anybody, any business can eventually earn that $1000, given all the time in the world. So the real challenge with this goal, and what makes this goal have a bigger impact, is if you earn that $1000 as quickly as possible. Because the faster you're able to earn that $1000, first of all the more exciting and motivating it is, and the sooner you can get on to bigger goals. But also, it gives you further evidence that the systems, the products, the marketing messages that you have are really working. If it takes you a couple years to earn that first $1000, I would really recommend you go back to the drawing board and you work on either changing your product, or changing your marketing message so that people are more excited about what you have to offer. Alternatively, if you're able to earn that first $1000 in just the first month, then you know you have a killer idea on your hand, and the marketing messages that you're sharing are really resonating with people.
So while setting a goal of just earning your first $1000 might not seem as amazing as setting a goal of earning your first million, the truth is it can have a bigger impact on your long term success than trying to reach for that million from the very beginning.
The Bigger the Better
The last thing I want to touch on before we wrap this episode up is the idea that bigger goals are always better. There's this idea out there that you should set the biggest goals possible, and that whatever goal you set you should always times it by 10 and actually strive for that goal, because then you'll be player a bigger game, you'll be thinking so much bigger, and you'll be making different decisions that will help you get a bigger result than if you're playing smaller. There is certainly merit to this idea, but only to a point. More isn't always better, bigger isn't always better. Yes, it is good to set big goals that challenge your thinking and force you to play a bigger game, I completely agree with that. That point is the point where you can't possibly imagine actually reaching the goal.
If you can't imagine reaching a goal, and I mean actually imagine it, actually believe that it's possible, then you're going to feel overwhelmed by that big goal and you're going to shut down. You won't be thinking bigger because you'll be scared of the goal. Now of course, we can all do the mindset work to work on overcoming that and to think even bigger, but I also think that it's really important that we set goals that we can at least imagine achieving. Maybe we don't know all of the steps right now, maybe we don't know exactly how we're going to get there, and maybe the process is a little bit scary, a little bit overwhelming, that's okay. But, we need to at least imagine that we will reach the goal, or else we won't subconsciously believe that it's possible and we won't play a bigger game. We'll play really small, because we think that we have set ourselves up for failure.
Obviously, I don't want that to happen to you, so I would highly recommend setting goals based on math, because then you have quite a bit of evidence that you are actually capable of achieving that goal and it will be much easier to believe that you will be successful, and therefore act accordingly.
Thanks so much for listening to this episode of Work Less, Earn More. Now, here's what I want you to do next. Take a screenshot of the episode you're listening to right now and share it on Instagram Stories. When you do, make sure you tag me at @GillianZPerkins so I can see that you're listening. Sharing on Stories is going to help more people find this podcast so that they, too, can learn how to work less, earn more, and take back their lives. And if you really love the show, then head over to Apple Podcast and leave a review to give it a boost. Not only will this help the show out, but it's also going to give you the chance to win a 12 month membership to Startup Society. Each week, I'll be picking one winner. To enter, all you need to do is post a review on Apple Podcast and be sure to include your Instagram handle so we can send you a DM if you win.
Okay, now let's wrap this up. I'm Gillian Perkins, and until next week, stay focused and take action.
