Setting goals for your business is an important step in making sure it thrives. While some people might think this is a simple task, it can be more complicated than you may think. This guide will walk you through the process of setting goals and provide tips on how to make them actionable, achievable and measurable.
Why Are Business Goals So Important?
Business goals and objectives are important and should be established for a number of reasons.
If you don't define what success looks like, the chances are that your business will never achieve it.
You need goals to measure growth by comparing them from year to year or month to month. If you're not seeing the results that coincide with your expectations, then it's either time to adjust your goals or get to the bottom of why you cannot meet them.
Goals are also important because it shows that you're organized and have a plan in place, which is especially helpful when raising capital for growth. It lets potential investors know what milestones to expect throughout the process of investing into your business.
Goals keep you and your team focused, and provide a clear benchmark against which to measure your success. Clear goals enable you to prioritise the most important tasks and focus on the things that matter most.
Step 1: Identify Key Areas Of Focus
First things first. What are the top areas you want to focus on in your business? Of course, this depends on your unique business and industry, but some examples to consider include:
- Improve customer service
- Reduce costs by 10%
- Grow sales volume by 20%
- Be the first mover in your industry with a new product or service offering
- Increase employee satisfaction to 75%
- Improve customer retention rate by 5%
- Reduce company debt and interest expense below a certain threshold, e.g. £40,000
- Increase profit margin by 10%
- Reduce time required for product or service production by 12%
Step 2: Set SMART Goals
In order for your goals to be effective, you need them to meet a specific criteria. They must be SMART. This means:
- Specific - very clear and easy-to-understand.
- Measurable - determined by the numbers or data.
- Achievable - your goals must be realistic, or else you are simply setting yourself up for failure.
- Relevant - each goal should be pertinent and directly beneficial to your business.
- Time-bound - the deadlines must be clear and reasonable.
"Increasing profit margins" is not a good goal because it's far too vague. However, "increasing our profits by 10% in the next 12 months by reducing costs and increasing efficiency" is an example of a SMART goal.
Step 3: Set a Timeline
Your goals need to have a timeframe. This is important because it helps you think about which resources are required, how much time your goals will take and what milestones must be reached along the way. For example, you won't increase your profits by 10% overnight - it will happen in much smaller increments. Therefore, you should set milestones that will be reached along the way. For example, you might aim to increase profits by 4% by the end of Q1. Then, you can adjust your goals against real-time progress.
Step 4: Review Your Goals Regularly
It is crucial that you regularly review your goals to ensure they are still relevant and helpful. You may find that the market has changed, or that new opportunities have emerged based on customer feedback which would alter some of your original plans - this means it's time for an update. Maintaining four or five year goals is a good idea, but you should also create one-year and quarterly plans to ensure your business stays on track.
Step 5: Accurately Track Your Goals
You cannot measure progress unless you are measuring against something specific - that's where SMART goals come in. You need to establish metrics and benchmarks against which you can measure your progress. This way, it's easier for everyone to see whether they're on track towards achieving the goal and when adjustments need to be made.
Final Thoughts
Clear goals provide a clear direction for your business and keep everyone on the same page, working towards achieving something that is meaningful and beneficial to all. They can be used as an effective tool when pitching to investors or potential partners to give an idea of how the business will progress over time.
No matter how well your business is doing, there are always areas for improvement and new heights to reach. Setting goals is the first step on the journey to success.
