Wednesday, October 19, 2016

Seeking Your Goal

Goals are, with little doubt, what keeps businesses focused on objective for which the company was founded and a guidepost for maintaining profitability.  The classic management tool that is built in to Excel is, of course, Goal Seek.

Goal Seek is, of course, a “What If” tool enabling scenarios. What If scenarios are essential instruments of analysis for nearly any business, and Goal Seek allows you to “Set” the value of the Output at a particular value and find out what value of the Input variable achieves that output. Goal Seek can save you an enormous amount of work, and make you look good in the process (and we all like to look “Good”…).

The following is a very Simple Example showing how this tool works. With reference to the example below, let’s say that you are a Call Center Sales Manager, and you know the approximate number of calls you are going to receive for the next month, as well as the sales goal that has been set by the corner office big wigs. You wish to know the Call-To-Sale-Conversion-Rate so you can advise your staff. An efficient Goal Seek calculator can be created in the cells of your Excel worksheet as follows:

Supposition: Number of Calls x Conversion Rate = Number of Sales (e.g. B2*B3 = B4)
1) Insert the number of Expected Calls into Cell B2
2) Add the formula, =B2*B3 into Cell B4
3) Using the Goal Seek tool find the Conversion Rate by Setting the Cell B4 to the Sales Goal of 485, and have it reach that goal by “changing cell” B3.
4) The result for the Conversion Rate is 12.1% in this instance.

This tool can, of course, be used to keener advantage with more complex scenarios, but our example demonstrates the overall concept and use of Goal Seek.  This handy utensil can be very useful for the boardroom or any strategic venue. Another vital addition to an Excel Guru’s tool belt!

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