Why You Need To Set Business Goals

Just casually scrolling through Facebook, I am inundated with posts that are sales pitches disguised as business advice.

With so much pushy advice out there, in big, bold, bright words, it is easy to feel like, if you're not following all the advice, you're not doing the right thing for your business. Why aren't you improving your SEO and Google Ads and growing your traffic and increasing sales and becoming a £30 million business overnight?

It may be tempting to try and get from A to B as quickly as possible. After all, who doesn't want to have a million pound business immediately? But the reality is you can't do all things at once, but more importantly, you shouldn't do all things at the same time.

Why? Shouldn't you be shooting for the stars? Absolutely, but that should be your long term goal. If you grow too fast too soon, you can end up spiralling out of control and failing as a result. Look at Issa, the dress brand that shot to fame when Prince William and Catherine Middleton's engagement was announced. That beautiful sapphire wrap dress, matching that iconic sapphire engagement ring, was on the front page of every newspaper and magazine. That's the dream for any brand: overnight fame, A++ celebrity wearer, international coverage. Heck, it even has its own Wikipedia page. However, the brand was already on some shaky ground financially, so with the increased coverage, the demand for their dresses shot up before their production process could catch up.

"From the day of the royal engagement our sales doubled. I didn't have the money to finance production on that scale. The bank refused to give me credit and the factory was screaming for me to pay its bills."

-- Daniella Helayel
Issa Founder & Creative Director

Admittedly, Issa's overnight success was a surprise to them (as they allegedly didn't know Catherine was going to wear the dress for the photocall), but their story is a great example of how, if your business grows before its ready, it can lead to its demise instead.

To illustrate our point, let's go through some scenarios and why certain strategies are great ideas for one situation but not another.

Scenario #1: I want to grow my business but my production line is maxed out

Let's say you own a dog treat bakery. You are baking doggie biscuits every single day at home, but you still have a backlog of orders and your lead time is 2 weeks to try and handle demand. That's so great your business is booming and keeping you busy! But this means you shouldn't be looking to grow your business, because you will not be able to handle the increased demand. Therefore, there is no point investing in improving your SEO* rankings, because with greater customer visibility comes increased purchases, and you are in no position to take on more orders than you already do.

Instead, you should figure out how to streamline your production or increase your capacities. Are there products that have a longer shelf life that you can bake and then store so you batch-bake rather than bake to order? If you only have one oven, is there a way to acquire more, or even invest in a small bakery outside of home? Once you have the resources to meet the increased demand, then look to invest in SEO and even social media strategies to raise brand awareness. But don't do it in reverse, as you can end up with unfulfilled orders, which can lead to unhappy customers, and if your business starts receiving an increase of negative reviews... well, the downward spiral can be cruel and rapid.

*If you are unfamiliar with SEO, read our KISS guide on the topic

Scenario #2: I'm happy with the amount of traffic I'm getting, but I'm not seeing them convert into orders

Your website ranks highly on Google, your traffic is on the rise, but the number of orders haven't followed a similar upward trajectory. While we don't expect orders to increase at the same rate, surely there should be an uplift. Well firstly, congratulations on the increased traffic! That is not an easy thing to achieve. Now onto business: in this case, investing in PPC* is not the answer: getting your website boosted to the top of the search page will bring more traffic, but your problem isn't traffic, it's conversion.

Instead, you should be analysing your PDP* and general customer experience to see if there are any glaring issues that are putting visitors off from becoming customers. In eCommerce, you cannot feel or see the product in real life, so are there enough images to tell the customer exactly what is on offer? Is your website reflecting the right amount of stock you're holding? Can the customer find exactly what they want easily, whether through filters or by searching keywords? Is your checkout process seamless and easy, even for first-time online shoppers?

Once you smooth out any lumps and bumps in your shopping experience, you should see a lift in your conversion. So once your conversion rate is at an improved level, and you have the capacity to fulfil more orders, then you can look back to using PPC or social media to target more potential customers who haven't yet come across your site.

*To learn more about PPC and PDP, click on the respective links to read our KISS guides on the topics

Scenario #3: My sales are through the roof but I'm not turning a profit

I actually have a story about this. When my parents were young, they used to run a popular deli in Hong Kong. My mother is a well-travelled foodie with exacting standards and a precise palate, and my father (also a well-travelled foodie) took care of the logistics and operations. They used to sell posh sandwiches and soups for the lunchtime corporate rush, and this was their USP (Unique Selling Point), resulting in huge growth in popularity and sales. However, the increase in business did not equate to increase in profits. Why? Because they were selling their food at an affordable price, but they were using incredibly premium ingredients to uphold their USP. An obvious example: they had lobster bisque on the menu! The cost of the lobster was way more than the price of the soup they were selling. There's a reason why Pret a Manager stick to Souper Tomato.

My parents can laugh at this now, and they are both very successful entrepreneurs in their respective non-F&B industries, so they learnt their lesson. But P&L (Profit & Loss) analysis is vital to ensure your small business turns a profit; after all, that's what we're all working for, right?

So if your sales are rocketing but your profits are not, now is not the time to acquire new customers. Something is fundamentally wrong with your pricing architecture. Perhaps it's time to review your pricing model. Were the prices set when you first started your business and haven't been updated to reflect modern times? Are you undercutting your competitors so much, which would explain your increased sales, but to the point you aren't considering the rising costs to provide such services? Are your margin calculations accurate to begin with?

Conclusion

It is tempting to try and achieve it all in one day. Who doesn't want to have a super successful business that rakes in millions? However, there is a time and place for each business decision. It is by no means easy to say no to quick wins and immediate growth: I have faced corporate firing squads in boardrooms and trade meetings at publicly listed corporations, where every red number is a huge cause for concern. But by calling "time out" and spending time figuring out the root cause of the problem, it allows you to diagnose the issue and come up with healthy, sustainable solutions, paves the way for stability and smoother operations in the long term.

If we end with another case study, the story of Aesop is one of patience and authenticity. Rather than rush to hit ambitious growth targets as quickly as possible and change brand direction dependent on the trend du jour, Aesop stayed authentic to their beliefs (Aesop did not enter the lucrative Chinese market until 2019, when laws on animal testing changed), built their network (now stocked in every luxury hotel that cater to the rich and famous), carved out their distinct identity (those earthy brown bottles are iconic, but more importantly, immediately recognisable), and brought out new products only when ready (in their busiest year, they brought out only 10 new products, going against the trend of constant newness and product refresh).

Result? In mid-2023, Aesop was acquired by L'Oreal, who valued the business at around $2.5 billion, making it their most expensive acquisition. But the lesson we want you to take away is that Aesop was founded in 1987. It took 36 years of brand building, identity carving, product launching, saying no to inauthentic opportunities, ups and downs and everything in between to get to where they are now. So don't feel like you have to rush your business's next step: good things do come to those who wait.

Want to discuss how we can help your business take its next step? Or just not sure which way to turn next? Speak to us and see if we can help. We can create a Strategy Consultation for you, our most comprehensive package, to delve into the nitty-gritty of your business and spot where the right opportunities lie.

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