The Critical Importance of Setting Specific Business Goals
Successful business owners understand the importance of having a strong vision for the future. An important part of that vision is a clear idea of what success looks like, and laying out a route to get there. The ultimate goal, of course, is profit, and setting clear and specific goals is the surest road to that destination. It’s difficult, if not impossible, to reach a target that is fuzzy or doesn’t exist at all. “Companies without precise overhead and profit goals never make enough money and probably won’t make a profit,” said George Hedley, best-selling author of “Get Your Business to Work.” “Companies that carefully track costs, target profit and control overhead are in-control and stay ahead of their competition.” According to a Construction Financial Management Association study, companies that have specific strategic plans with clear targets and goals make 33 percent more profit than companies without targets. Here are nine real-world guidelines that will help you set goals that will guide you along the path to optimum profits and a bright future:
1. Create Both Long-term and Short-term Goals While there will usually be an interactive relationship between long-term and short-term goals, each deserves to be defined separately. Long-term goals will usually revolve around your vision for the company: where do you want it to be five years or 10 years from now, or where do you want it to be when it’s time to retire. Because of the broader nature of long-term goals, it’s best to set them first. Once long-term goals have been defined, it’s time to look at the short-term, one year or less. What needs to be done now? What areas can be addressed with the expectation that results will be measureable within a short-term window? Long-term goals provide excellent motivation to keep focused on the elements that will help shape the company’s vision for the future. Short-term goals focus on steps that can be taken today with the expectation that results will be evident within a year or less.
2. Your Goals Must be Specific Perhaps the deadliest form of self-delusion for business owners is the failure to set any business goals. Next in line is using generalities instead of specifics. “Improving profits” or “increasing sales” are pitfalls masquerading as goals. To have meaning and to be effective, goals must be expressed in specific, measurable terms. Improving gross profit by 4 percent or reducing overhead costs by 6 percent are specific, meaningful goals. Equally important, they are measureable. There’s an old business saying: If you can’t measure it, you can’t manage it.
3. Set a Time Limit for Your Goals Increasing revenue by 12 percent satisfies the need for specificity, but without a time limit for the goal to be accomplished, it has little or no meaning. We will increase sales by 9 percent by January 1, 2018, adds a sense of urgency and a no-escape clause that makes it difficult to wheedle your way out of your pledge. A goal without a deadline is little more than an idle thought. Goals without time limits are no goals at all.
4. Make Sure Your Goals are Both Realistic and Challenging There’s an old saying among tennis players: If you want to improve your game, you must play with someone who is better than you are. Playing with someone who is better than you are provides an ever-present challenge to do better. Playing with someone who is less skilled makes it unnecessary to improve your game. When it comes to setting business goals, it’s important to set them high enough that achievement isn’t going to be a walk in the park but realistic enough that they are achievable. In short, set goals that will require hard work and perseverance but are doable.
5. Gather Input from Your Employees You may have a well-defined set of your own objectives for your business, but an important part of achieving those objectives is getting your employees in on the act. Top-down directives from the boss are far less effective than enthusiastic support from the people who play a major role in day-to-day operations, and one of the most powerful ways to get support from your employees is granting them a little pride of authorship. It’s no secret that employees who feel they played a role in setting goals are likely to work hard to meet those goals. “It’s really important to have enthusiastic buy-in from your employees,” said San Francisco-based business coach Bill Baren. “Everyone feels they have some ownership in the goal, as opposed to the boss acting as a dictator.” “Even a really good boss can’t see it all,” said Francisco Dao, founder and president of The Killer Pitch. “Get the feedback of people who will be working on the front line to meet or beat the company goals.”
6. Make Your Goals Action-Oriented In defining your goals, specify which actions need to be taken, by which people and when (and don’t forget to include yourself). If your goals include revenue objectives, obviously, your sales team will play a major role. What needs to be done as a team? What needs to be done by individuals? What can you do? Reducing overhead expenses is a good example of a goal that will benefit by cooperation and enthusiasm from all employees, some more than others. Which employees are most likely to have opportunities to help reduce overhead, and have you asked them for their input?
7. Don’t Carve Your Goals in Stone While it’s important to keep your goals specific and time-oriented, it’s equally important to stay flexible. In business, the unexpected is always lurking right around the corner. When it rears its ugly head, it may be necessary to adjust your goals to compensate for a change in circumstances without losing any of the momentum already gained.
8. Put Your Goals in Writing Committing your goals to writing is an important first step in achieving them. Mental goals are too easy to ignore. With all of the pressures imposing on our daily lives, the best of intentions left out there floating in the ether are likely to give way to more pressing matters. Committing goals to writing creates an urgency that keeps them in focus. In a study involving 267 participants, Dr. Gail Matthews, a professor of psychology at Dominican University in River Forest, Illinois, found we are 42 percent more likely to achieve our goals just by writing them down.
9. Celebrate Every Success Arguably, there is no better way to keep motivation at a high level than celebrating successes already achieved. Your short-term and long-term goals will be made up of individual increments, each of which can be, and should be, monitored on a regular basis. By celebrating even minor successes, you put renewed energy into the effort to push on to the greater successes that lie ahead.
More than 80 percent of the 300 small business owners surveyed in the recent 4th Annual Staples National Small Business Survey said they don’t keep track of their business goals, and 77 percent have yet to achieve a vision for their company. Establishing business goals calls for an investment of time and effort in analyzing where your business is today and where you want it to be in the future. Instead of setting your business up for mediocre performance, or even failure, help set it up for success by applying these nine goal-setting tips.