It’s no secret that successful entrepreneurs and other high achievers set goals. Setting smart goals in the right way can produce long-term vision and short-term motivation. Taking steps to reach a goal helps you focus on what you need to learn, how to organize your time and how to use your resources to meet those goals.
If you’re routinely unable to meet your business goals, it might be because those goals weren’t properly set in the first place. It’s common for business owners to spend too much time on day-to-day tasks instead of making progress on goals.
What are business goals?
Business goals are any milestones that you plan for your business to achieve during a given timeframe. These goals can pertain to individual departments or your whole company. They can be broad or specific, but no matter what, when setting business goals, you should work toward achievements that meaningfully reflect your company’s main mission.
Some examples of business goals include:
- Boosting your profits in each quarter
- Making your employee training process more efficient
- Hiring a certain number of new employees
- Launching a new department by a certain deadline
- Obtaining the resources to promote a high-performing employee
The importance of setting business goals
Among the reasons why setting business goals matters are that:
- They provide markers for measuring success. It can be difficult to know whether your company is faring as well as you’d like (and as well as needed to be profitable) without concrete goals. Put another way; goals are the reference frame for measuring business success.
- They align your team’s work objectives. A sales team aware of your $100,000 quarterly sales goal may feel more pressure to reach it. As such, your sales team may put in more work – and with more work, your company benefits and grows.
- They set employee expectations. Beyond just stating company objectives, business goals inform your employees of what to expect during their workdays. If your employees know of your $100,000 sales goal, they can better estimate how they’ll need to divide their tasks per day to help you reach this goal.
- They use past trends to inform future ambitions. Often, a goal is a reflection of recent business accomplishments and how you think you can replicate them. For example, if you obtained 30 new customers last quarter, you can set a goal of obtaining 35 new customers next quarter. Since you already know you can attract 30 customers in a quarter, going for 35 new customers is likely realistic.
Now that you understand the importance of setting business goals, here are tips to help you dig in and set attainable goals.
How To Set Business Goals
Have you heard the acronym SWOT? A SWOT analysis can be valuable when you sit down to establish goals.
SWOT stands for Strengths, Weaknesses, Opportunities, Threats. Focusing on these four aspects helps you identify business objectives and business trends that will give you the most benefit. In turn, you can use that information to craft goals.
SWOT is broken down in this way:
- Strengths: Characteristics of the business that give it an advantage over others. These characteristics could include exceptional customer service, a distinct online personality, or proprietary technologies that other competitors lack.
- Weaknesses: Characteristics of the business that place the business at a disadvantage relative to others. Many of these traits will be less obvious to the public – think along the lines of high employee turnover, poor cash flow, or a thinly spread staff.
- Opportunities: Elements the business could exploit to its advantage. For example, if the number of people within your target demographic in your region unexpectedly increases, your business can likely capitalize on this increase.
- Threats: Elements that could cause trouble for the business. For example, if you run an accounting business, do-it-yourself tax preparation software platforms will always pose a threat to your company.
Let’s look at all these traits in one example. If you have a coffee shop, strengths might be a superior product or an advantageous location. A weakness might be high rental costs. Opportunities might be adding a popular food item to your menu, and a threat could be rising prices of coffee beans.
Once you’ve performed a SWOT analysis, you’re ready to start setting goals.
Goal Setting Strategy
SMART is another acronym to help you set goals. The business goals you set should be:
- Specific
- Measurable
- Achievable
- Relevant
- Time-Based
Here are tips on how to use each element to craft business goals.
Be Specific
Instead of simply “cutting costs”, a specific goal could be “reduce facilities expenses by 10% over the next 3 years.” Instead of “increasing profits”, put a number on it like “increase sales by 15% this year”.
Measurable
If you’re not measuring, you won’t know where you stand, and your progress can screech to a halt. For example, one of your business goals might be to increase website traffic by 10%. Visitor page views will help you measure that goal. If views are up, you’re doing something right. Views down? Look at the steps you’ve taken and adjust accordingly.
Achievable
To make goals achievable, you need to be aware of your limitations. Do you want to add 20 more products? This won’t be attainable unless you have the available working capital to purchase the inventory and the employee support to manage it. Be realistic and take cash flow, employee numbers and your own bandwidth into account.
Relevant
A goal like “increasing Facebook fans” is fine. However, relevancy is tied to the “why” of a goal. If you simply want more fans because that’s what your competitors do, that’s not enough. A relevant goal would be to increase Facebook fans to highlight new products, advertise a sale or up customers engagement.
Time-Based
This quote from time management expert Diana Scharf sums it up: “Goals are dreams with deadlines.” Don’t end up discouraged by setting an open ended goal. Instead, try to accurately estimate how long it will take you to reach that goal.
Not setting goals has been compared to setting out on a ship without a destination in mind. Use the SWOT and SMART approach to help you set attainable goals and stay on track as you work to achieve them.
How to Use SMART to Craft Business Goals
To best understand how to set specific, measurable goals, an example will be helpful. In this case, the SMART method will be applied for an accounting business. The SMART goal-setting process for this company might include the following:
- Specific: Let’s say you want your accounting company to earn more revenue. A simple way to do so is to grow your customer base, but an actionable way to do so shouldn’t be so broad. Instead, a specific goal might be to grow your customer base through online ads.
- Measurable: If you already have 100 tax preparation clients, you can decide to aim for a short term goal of 10% customer growth. To have reached the goal you set, you’ll need to reach 110 customers. To easily track your progress toward this goal, you’ll want to regularly check which of your new clients come from your online ads.
- Achievable. If you have the money to pay for Google Ads or hire a third-party online ad firm, then your growth goal should be achievable. You can also task your employees with working on these goals for your business if they have the capacity.
- Relevant. Since increasing your client base is directly correlated to more revenue and thus more business success, you can be certain that it is a relevant goal.
- Time-based. If your original figure of 100 tax preparation clients is the number of clients you had last year, then set the end of this year as the deadline for reaching your growth goal. Once you do, your goal officially becomes time-based. Note that although a year-long objective may at first seem like a long-term business goal, one year is often a relatively short time for a business.
Your Road Map To Realistic Business Goals
With the above strategies for devising and meeting your business goals and objectives, you can easily develop a meaningful business plan that makes all your ambitions possible. Beyond just developing goals as instructed above, you may also want to write your goals down and refer back to them on a regular basis. With these guiding words, achieving business goals can be just as straightforward – and exciting – as setting them.
