Success is defined differently for each person and business. The paths to achieving success, however, are often similar. In this article, you’ll find a step-by-step guide and many examples of how to set smart business goals.
The ultimate goal of most businesses, of course, is to generate livable income for the owners and employees. But in order to be successful, you need to think in-depth about both short-term and long-term goals.
Creating specific trackable and measurable goals is a tried-and-true business practice for a reason: It works. Most large companies set very specific business goals at every level of the company, from the C-Suite to junior contributors. Every employee has a measurable objective to accomplish, and that contributes to the overall growth of the company.
By following this path, business owners can exert much more control on the directions in which the business grows, and get a granular view of what works, what doesn’t work, and how to guide the business toward success.
When you are defining your business goals, there are certain benchmarks to take into account, but these can vary by industry, location, size, and many other variables. Fortunately, there is a process that many business owners and other professionals follow to define their goals. It’s called SMART and stands for Specific, Measurable, Achievable, Relevant, and Time-bound goals.
Specific—Being precise and detailed about your goals is the first key to making the process work. What exactly are you trying to accomplish? How will you do it? Who will be involved? Are there any obstacles toward meeting this goal? Without this information, it’s difficult to achieve concrete growth.
Measurable—Setting goals doesn’t mean much if you can’t track your progress. Many goals require multiple steps, and each goal should come with clear objectives and milestones. For example, “get new customers” is not a measurable goal. What defines success? “Get 20 new customers (five per quarter) this year” is much better.
Achievable—This is often the most difficult aspect of setting goals. You must strike a balance between being ambitious and being reasonable. Understanding your company and your industry can really help with business goal planning, as can doing a little bit of research. In the end, it’s better to start small and step up your goals as you meet and surpass them.
Relevant—Why does this goal matter? How will it help your business? Not every goal has to have a direct effect on the bottom line, but it’s important to understand why you are trying to achieve this goal and what it will do, so you can better prioritize your objectives.
Time-bound—The final step is to ensure that there is a time frame attached to the goal. Without one, it’s too easy to kick the can down the road. Set dates to meet milestones and check in to see if you’re on track. If not, find out why and figure out what you can do to improve.
Now that you know the basics, let’s give an example of strategic goal-setting for a small business. Let’s go back to our idea of growing the business by getting new customers. We make it specific and measurable by putting a target number on it: 20 new customers. Let’s time-bound it by adding a completion date of the end of the year. We can set milestones to help measure whether we’re on track: five new customers per quarter. It’s relevant, because more customers will directly impact revenue.
That’s a fairly well-defined goal with a measurable outcome, but can you get even more specific and detailed? How are you going to get these new customers? Word of mouth may have worked for you in the past, so let’s start there. How are we going to encourage word of mouth? We could provide incentives or discounts to current customers if they make referrals. Who from your business will be involved in this goal? Anyone who engages with current customers can convey the incentive information. Now, this is starting to feel like an achievable, fleshed-out business goal that we can put into practice. Simplify it down, and you get:
What: Get 20 new customers this year (five per quarter).
How: By incentivizing current customers with a 10% discount on their next project if they refer new business.
Who: Our customer success managers who interface with the clients.
Once you have a few goals in place, it’s time to work together to make them happen. That means checking in with the people responsible for implementing them and measuring progress against your timeline. For some short-term goals, that might mean a weekly meeting. For a long-term vision, it may be once a quarter or once a year. If you’re on track to meet your goal, great! Discuss what is working and celebrate the wins. If progress has been slow, troubleshoot and talk about what needs to happen to get back on track. As is the case with everything, your company will get better at this over time.
A majority of the business goals you create are likely to be short-term. They might be achievable in a few weeks, or it may take as long as a year or so. Short-term goals tend to be more actionable, and they are the keys to achieving your long-term vision. Beware, however, that setting too many business goals and objectives can cause you and your employees to lose focus. Prioritize what you think are the most important objectives at any given time.
Short-term goals can be anything really, as long as you believe they will help your business. And remember, they don’t always have to have a direct effect on your bottom line. In addition to the goal outlined above, here are some other examples of short-term business goals to get you thinking:
This is a specific short-term business goal worth mentioning. It’s difficult to hit your other business goals if you have trouble finding and retaining good talent, and 78% of workers say benefits packages are just as important as salaries in evaluating employers.1 Employee benefits are often seen as a large expense by small-business owners, but they can be surprisingly affordable. Even voluntary benefits where the employee absorbs the cost can help. Offering the right mix can have a big impact on employee retention and on employees’ feelings of financial security. Healthier, more motivated employees who want to stay with your company can help you accelerate your other business goals, turning what looks like a cost, into a revenue driver for you.
What will your business look like five or even 10 years from now? It shouldn’t look the same as today (unless that is indeed your goal). Long-term goals are how you define the future. These are goals you’d like to see your business achieve years down the road. They tend to be broader and more loosely defined than short-term goals. Often, long-term goals aim to define what success looks like for your business, and those short-term goals are what drive you toward reaching it.
When deciding on long-term goals, ask yourself how you will define success in five years. This can vary widely depending on your company, history, and personal choices. In addition, long-term goals for a new business vary from those of an established, profitable enterprise. For reference, here are some common long-term goals:
One long-term goal that business owners often neglect to think about is what happens when they are done with the business, when they want to retire. Many are so involved with building the company that this simply isn’t a priority. It should be. Setting yourself up for your best retirement and ensuring that your legacy continues is important, and that’s where succession planning comes in. After all, the ultimate goal of your career should be a happy and healthy retirement, whatever that looks like to you. You don’t have to tackle this alone. Our agents are here to help you with your business needs and plan for the future.
This article is provided for your general informational purposed only.
1“Your best employees are leaving. But is it personal or practical?” Ranstad, August 2018.