3 Tips for Creating Financial Goals
A goal is defined as the result of achievement towards which effort is directed. So, I have a few questions for you:
What are your goals for 2021?
Where are you directing your efforts?
Training, Team, Sales, Finance, Marketing, Equipment, Compensation?
Are you setting goals for your company and your providers?
Have you analyzed your P&L to see where you can make changes?
How are you communicating those goals and what tactics and strategies will you put into place to achieve the goal?
What data and reports have you analyzed that will change what you do in 2021?
How do you plan to execute the plan and hold people accountable?
When we ask our clients about their revenue goals, they usually say I want to grow by 20% or I want another $1M....its not specific. HOW? We want you to strive for those numbers. But when we ask, “How did you come up with those goals, or what mechanisms did you use to develop them?” The majority of the time they don’t know.
We WANT you to know because “You gotta know if you want to grow!” That’s why it’s so important to learn not only how to create goals, but what to do with them once you set them and how to communicate them to your team to achieve them.
#1 –Why create goals?
The bottom line is goals do the following:
Are intentions that drive positive behavior
Result in companies being more profitable and able to reach their potential faster
Give us the opportunity for feedback
Force the team to know the numbers and be accountable
Put Key Performance Indicators (KPIs) and benchmarks in perspective
Challenge the team to reach their full potential
Must be measurable with a concrete endpoint
The primary reason we have goals is to drive revenue. We want to make sure our company projections and our provider projections are aligned. Goals work because they are intentions that drive behavior. Having defined goals helps companies become more profitable and achieve results faster. Setting goals also provides an opportunity for you as the practice manager or owner to communicate with your team and get and give feedback and provide coaching.
Goals create transparency. When all the numbers are laid out and clearly defined, everyone knows exactly where the company is and where they stand. Everyone needs to know the numbers because it’s everyone’s responsibility to grow the company. Having goals allows you to monitor your key KPIs and use benchmarking to see how your practice is performing. Having goals challenges your team to reach their full potential. Finally, goals need to be measurable and have a concrete endpoint. In other words, a “by when” date to achieve them by.
#2 – How to Create Goals
Now that we know why goals are so important, how do we create them? There are 3 numbers you must know before you create goals:
Your current provider and company Revenue Per Hour (see the previous blog on this topic for more information)
The total amount of hours you have available to sell in the month (or the period that the goal represents)
Your current productivity percentage rate (which is a benchmark)
For example: You know your Revenue Per Hour is $600. If your potential is 100 hours to “sell” and you have 50 hours sold, you are only operating at 50% of your potential. You must have this information before you create your goals.
Once you have these three pieces of information, you can create goals that will increase revenue by either 1) increasing your revenue per hour or 2) increasing your productivity rate.
Here is an illustration:
Mary’s current revenue per hour is $600 and she has 173 available hours of time to sell. Using the benchmark from the previous quarter (which is a typical benchmark to use) she is at a 60% productivity rate or selling 104 of the available 173 hours.
So right now, Mary is generating $62,400 per month. To set a goal for Mary, we can do one of two things: We can discuss her increasing her productivity to 70% for the next month which would be 121 hours sold, or we could increase Mary’s revenue per hour by analyzing our prices, perhaps they are too low, and or making sure that Mary is spending quality time in the consultation, developing rapport and building long term treatment plans whereby clients are getting combination therapy. By doing this we have happier patients, better results, and increased revenue and long-term retention.
This was an example for an individual, but you can create the same type of goals for the practice as a whole.
Our comprehensive Financial Foundations course consists of 7 in-depth modules and goes into depth on this topic. In addition, it provides 7 financial optimization calculators that once you run reports from your practice management software, you can take that data and enter it into the respective calculator which will help you determine the goals and or what changes you need to make to increase efficiency and profitability. You can learn more about the course by visiting www.terrirossconsulting.com
#3- Communicate your Goals
So now that you have created goals, how do you hold your team accountable? Communication is key.
Goals give us the opportunity for feedback. We recommend at the first of the month to sit down with each of your providers and talk about the goals they have for the coming month. If they were behind with their goals for the previous month, you can use the opportunity to coach them so that they can not only achieve this month’s goals but make up the deficit from the previous month.
Then we recommend you sit down in the middle of the month and have more conversations about goals. You don't want to wait until the last day of the month, and say, “darn, you didn’t make your goal.” You want to coach and communicate with your team throughout the month to see what challenges they are having, more importantly, what opportunities they have with patients coming in, and or re-evaluating the consultation process.
Holding your team accountable is key and being transparent allows everyone to be involved where you gain buy-in. We recommend creating a goal scoreboard that you can post in your break room so everyone can see it, this is like internal friendly competition. A visual like a scoreboard highlights those that are knocking it out of the park and also provides incentives for those who are lagging behind to step it up.
Another great tactic is having a daily huddle—a brief 5-10-minute morning meeting with a simple agenda:
What are the challenges we might have today?
More importantly, what opportunities do we have?
What's our goal for today?
A few simple words of inspiration or motivation
Daily huddles should be consistent, which means every single day at the same time, and your numbers should be shared daily.
First and foremost, of course, is safety and treating patients as people, not numbers. We want happy patients and great results. But we also want you to have a profitable business. When people feel like a cohesive team and have clearly defined goals, and are given the tools, training, and resources to achieve their goals everyone wins.
It’s your job as a leader to coach your team...to have those difficult conversations...to push their limits and help them stretch so that you can “Get it Done in 2021.” and if this is an area where you struggle or need help, we are here to help you.
Terri Ross can take your business to new levels, whether you’re looking for exclusive private strategy sessions, corporate sales training, or a keynote speaker for the next major aesthetic event. Book Terri Ross today to take the first steps in giving your business the tools it needs to succeed in this incredibly competitive landscape.