How to set effective business goals
“If you don’t know where you’re going, any road will get you there.” – Lewis Carroll
Let’s say that your business is like a boat. Now, imagine that your business goals are the destination you want to reach. To avoid shipwreck, you’ll need to have clear goals and objectives to help you navigate to the right destination. Don’t worry, it’s easier than you might think!
Your goals are your guide
Goals are specific ideas or statements of where you’d like your business to go. Your industry will play a part in your goals, but you’re the one who has to set them. Maybe you want to launch your new business. Or really “wow” your customers with over-the-top customer service. Or maybe you want to grow your market share—the percentage of business you control of the total market you’re in. Goals can help you measure how much your company achieves.
Struggling to choose the right business goals? That’s where your business mission and vision come in. Just like a compass helping a captain navigate their ship, tying your goals to your mission and vision helps ensure you’re navigating your business meaningfully.
Let’s break it down. Your mission is a statement of who you are as a company. Your vision is a statement of who you want to be. Let’s take IKEA for example:
“To offer a wide range of well-designed, functional home furnishing products at prices so low, that as many people as possible will be able to afford them.”
Ikea’s vision is to create a better everyday life. Their mission is to provide good home furnishing that everyone can afford. With this understanding, IKEA management probably won’t set a goal of raising prices just so they can make more money. But, they might have a goal of reducing expenses.
Once you have a clear idea of your own mission and vision, it’s time to make them a reality. Let’s explore the general goal types. Maria Marshall, an associate professor at Purdue, says that goals usually fall into four areas:
- Service-related. Your strategy for improving customer service and keeping customers.
- Socially oriented. Giving back to the community.
- Profit-related. Making more money and increasing your profits.
- Growth-related. Marketing to get more customers and expanding business operations.
Let’s say you have a goal to land on the beaches of Bermuda. Without the correct coordinates, you could end up in the perilous Bermuda Triangle. So just like sailing in the general direction of Bermuda won’t guarantee you a pretty beach, your business goals can’t be too broad. Goals need to be specific to get you where you want to be—and that means supporting your goals with objectives.
There’s a common acronym that’s great for setting your business goals. SMART: Specific, Measurable, Achievable, Relevant, and Time Based.
Let’s look at an example of how SMART helps to create business goals that really work…
Suppose the beach is calling your name and you want to set a goal of getting to an island. The SMART goal for this could be: “Travel 1,000 miles to Bermuda by boat in six months.”
- This is specific. It says where you are going (Bermuda) and how you’re getting there (by boat).
- It’s measurable. You want to travel 1,000 miles.
- Your research should show this is achievable—six months is plenty of time to go 1,000 miles.
- It’s relevant. Bermuda relates to your goal and you need a boat to get there.
- And, it’s time based because you’ve set a date (six months) for when you want to see these results.
Similarly, SMART goals help your business to grow in the right direction. Your goals will support your mission and vision. Your objectives support your goals. See the pattern? Objectives are going to make your goals a reality. Let’s break it down some more:
Objectives are the sub goals to your goals. It’s the how and what of goals. A clear connection between your goals and business objectives makes it easier to see what needs to be done.
Now, it’s time to think about how you’ll get your objectives done. If you’re starting a business with others, everyone should be on the same page when it comes to the business’ goals. Having engaged cofounders and employees is important. Employees need to help complete the objectives that lead to success (business owners can’t do it all!).
Accountability means knowing who is responsible for what and by when. If you’re starting a new business by yourself, you have to hold yourself accountable. Having others involved means the entire team and management must be accountable.
First, make sure your team knows the mission, vision, goals, and objectives inside and out. Then, assign tasks to the relevant people. It’s best to have the tasks up for everyone to see. A dashboard is a good example. Let’s look at an example of objectives and tasks that could support our SMART goal:
Ask your team to provide regular reports on progress and completion. Check in as a team each month and quarter. This helps to measure progress, set new goals, and adjust previous goals and objectives if needed. And don’t worry, you’re not writing your goals in stone. Specific doesn’t mean permanent.
Straighten the course with goal adjustments
Maybe you learn the island you’re sailing to is haunted. Or, maybe the wind has been against you for weeks. Things both inside and outside of your control may make adjustment necessary. Just be sure you dig into why your goal wasn’t reached.
Thankfully, goal adjustments work in both directions. If you find that you’re blowing your customer service targets out of the water, consider increasing those targets. Or, if you find that you’re not meeting your sales goals, try lowering those numbers for the next round. Staying on top of your objectives and goals helps to improve success. But, what about others in the business that aren’t hands-on with your goals?
Keeping all hands on deck
Who needs to know about your business goals? Obviously, your cofounders and employees need to know what’s going on. You can’t change the course without informing your crew–even if they aren’t the one steering. Maybe you have an advisory board. Maybe you have loans from banks or other organizations. Stakeholders should know your goals and agree with them. It can even help to make your goals public knowledge.
The University of Notre Dame recommends this approach. It says: “An extremely effective technique for achieving business goals is making them public. Invite a team or even a single person into your plan; you’ll face accountability which can be very motivating.”
Don’t get so lost in the numbers that you don’t take time to celebrate success. People work hard to meet the business goals and objectives you’ve set. It’s important to acknowledge these efforts. Make a point to celebrate success with everyone involved. When you set your goals, think about working an incentive in there. Even small incentives can help goal achievement. Some great examples of celebrating are:
- Monetary bonuses or paid time off
- Leaders and managers present handwritten “thank you” notes to team members
- Schedule a team event, like a happy hour, offsite activity, or family picnic day
- Call out an “employee of the month” in the company meeting
- Have food delivered to the office for a team meal
Continue the journey
You’ve reached your destination through hard work, perseverance, and a boatload of teamwork. There may have been unexpected issues along the way, but you had a mission and vision at your back, plus diligent attention to your goals and objectives. Being a business owner means you’ll always have more goals to reach. Use the information here to continue setting new goals, creating objectives, and establishing what success looks like for you. Then, discover nine strategies to steadily grow your business further in the video below.
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