THINKING BUSINESS
a blog by Chris Barrow

Why the difference between targets and run rates can make a big difference to your business performa

When it comes to sales performance, there is an interesting difference between targets and run rates.

Target = quantity to be achieved before a deadline.

Example – we want the business to gross £1m in 2018.

Run rate = average quantity per period of time.

Example – we want the business to gross an average of £19,230 per week.

Same ultimate goal but a very different experience in measurement.

If you set a £1m target, how often do you/the team stop, look and listen to how well you are doing?

Usually, everyone works hard in the hope that the result just happens.

It is easy to drift off course, especially easy to become a busy fool (doing things right but not the right things) and then realise that you have fallen so far behind that a catch up looks increasingly unlikely.

If you chase a weekly run rate of £19,230 there is a continued sense of urgency and a constant focus on performance.

I also recommend that over-production in any week is “banked” (reset the clock) and deficits are carried forward.

You can establish run rates for the whole business and/or for individual fee-earners and/or products/services.

In any sales driven business you require a sense of URGENCY.

Measuring and monitoring run rates will keep everyone on their toes.

P. S. In this example, I’d be equally happy if the client worked to a monthly run rate of £83,333 (with the same rules for over and under-production) but would warn them of the dangers of being too busy to keep count.

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