Setting Goals

Businessman should know the power of setting goals. Setting goals make successful people. However, many people are afraid of setting goals. This is labeled as “Elephant Chains”. When someone learns these “Elephant Chains” he will unleash the success that is within him.

By deciding to set a company goal for –let say-monthly sales, businessmen concentrate on improving their business instead of just working for it. They have to look at the production costs, i.e. parts and direct labor costs, they also need to know what their overhead costs are.

By setting goals in businesses, businessmen will not only increase their sales but also find they key to their company’s continued growth in the future.

The goal period can be set for yearly sales. A businessman must give his employees as many opportunities to win as possible. How can a businessman set his business goal? The followings are the ways that can be used to exercise.

First, a businessman needs to know cost of direct labor for the month. This is the real cost, including tax, insurance, retirement and vacations.

Secondly, he needs the goal cost to the company of all of the parts that were used during the month to produce his product or service.

Now by adding his cost of parts together then taking this figure away from the month’s sales he will have his gross profit figure. As an example in a company with $20,000 in sales, a cost of labor of $6,000 and a cost of parts at $5,000, the gross profit will be $9,000 or 45%.

If he takes the above example, sales of $20,000, he divides this by the total number of invoices that he has produced during the month, let’s say 67, this gives him the average invoice, value of around $300. This figure is a very important one and can be used in a number of difference exercises when somebody is working on some company’s finances.

The last piece of the information jigsaw that he needs is the cost of the month’s overhead. This must include every cost to his business with the exception of direct labor and parts costs. In the example, let us say that our overhead cost us $8,000 per month.

He knows that his overhead $8,000 and his gross profit margin is 45% so he must sell $17,800 per month to break even. He also knows that if he invoices 60 jobs at an average value of $300, he will break even.

COMPREHENSION EXERCISES
1. What does the writer think about people who are afraid of setting goals?
2. Does “the cost of labor” influence the gross profit?
3. Why should goals be broken down into short-term goals?
4. What is ‘elephant chains’?
5. What are some real costs for employees?
6. What do companies do to have their gross profit figure?
7. Is the meaning of ‘Weak even’ the same as ‘money loss’?
8. Find the word in the last paragraph that means “neither make profit nor lose some of money”.