I frequently coach individuals and groups on long-term goal setting. I have found a subtle trap that you can easily avoid if you take a moment to notice that not everything progresses at the same rate.

A great benefit of specific plans is the opportunity to track progress. After my clients set a ten year goal, I invite them to imagine themselves in the future, ten years hence, with the goal achieved. I then ask, “Look back five years. Tell me how much progress you had made at the halfway point.”

This where most people make a crucial error. Luckily, it is easy to avoid.

Let’s say you have set a goal for a specific measurable result ten years from now that can be expressed as a number. Today the number is 100 and in ten years you want it to be 715. People tend to assume that in five years they will be halfway. The arithmetic is simple. The difference between where we are and where we want to be is 715-100=615. Half of that is 307, so they expect to be at 407 after five years. That may be right, if you are making linear progress. Driving a car from point A to B should be roughly linear. You have a fairly constant speed, so you can expect to cover half the distance in half your total trip time. Each period of time adds its progress to what has been attained.

Financial behavior tends not to be additive but exponential. Compound interest is a familiar example. We are not merely adding interest to our principal, we are multiplying. A 20% annual rate will turn our 100 into 715 in ten years. When planning to grow your sales, don’t you think in terms of an annual increase of 10% or 30%? That is a compounding process.

Some processes start fast then level-off. Weight loss is like this. The first few weeks show great progress but each additional pound takes longer, even if you keep your discipline. The slower progress is not because you are failing; it is just in the nature of weight loss. Some processes have a declining rate of progress. I call them fast starting or front loaded.

Any one of these types of progress can get you to the same ultimate goal in the same amount of time. The crucial difference, the oversight that can sabotage your goal achievement program, is the huge difference in interim results.

If you set a goal to increase monthly revenue from 100 to 715 in ten years (120 months) you would need to grow by 20% per year. If you set your five year goal with simple arithmetic, as in our first example, you would expect to have sales of 405 in month 60. How would you feel in month 60 to discover that sales were 265? That you failed? Time to replan? No! You need to celebrate because you are exactly on track! With a growth rate of 20% you should not be at 50% of your goal but “only” at 27%. Don’t believe me? Click here to download the spreadsheet and try it for yourself, with any growth rate.

Be careful when you set your interim goals. Misunderstanding the natural rate of progress will make you seem offtrack and cause unnecessary corrections and discouragement.

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