Have you brushed up on your goal setting strategies lately? I know it may sound like basic business advice, but time and time again, I work with business owners who are struggling with setting and sticking to goals.
If you’re an entrepreneur, you know how critical it is to set goals regularly, but chances are, you either aren’t sure how to prioritize those goals once they’re set or don’t know how to avoid getting overwhelmed (or bogged down) by all that’s on your plate.
Good goal setting strategies begin with self-assessment. Start by asking yourself a few questions (and being honest with your answers):
- Do I regularly set attainable goals?
- Do I review my goals to measure my success?
- Do I set goals to complete projects within my business?
Most business owners will honestly answer NO to at least one of these questions, but most would like to say they could answer YES to all. It happens to all of us; even if you write down a goal list, you may end up putting it away and never looking at it again. Tucked in the desk drawer of every business owner is a long list of goals they may (or may not) complete.
So how do you successfully set better business goals and, by doing so, achieve them?
Don’t Make a Wish, Set a Goal
Often when business owners set a goal, it looks something like this: Grow my Business.
On paper, this looks like a great goal, right? It’s what every business owner wants to do. Business growth is critical to your success…but what are the steps you’re going to take to reach this goal? How do you plan to define and measure “growth”? Moreover, how will you know you’ve achieved this goal? Well, you won’t.
This goal is what I call a “business wish.” Yes, we all would like to see our businesses grow, but our true focus should be directed toward the action items and strategic plan. Better goal setting strategies mean outlining the steps required to make your wishes happen.
Think of setting your goals like creating a shopping list. When the cupboard is bare, you start jotting down a list: milk, eggs, bread. Now imagine you show up at the grocery store, pull out your list, and all it says is Go Shopping. The thought is laughable, right? You’d wander around the store trying to remember what you need to buy. If you’re like me, you’d forget half of the items you were supposed to buy and then run to the store again, hours later when your kids are asking for a glass of milk.
Setting a goal like “Go Shopping” is precisely the same as a goal like “Grow my Business”—it doesn’t mean anything without an action plan. Setting a generic goal of any sort wastes time and money, hindering your success. You’re running to the store over and over, and still turning up empty-handed.
Get SMART with Your Goals
You probably didn’t get this far in the business world without a grasp on the concept of SMART goals. Even though many of us are familiar with the SMART goal-setting concept, it bears reviewing—especially if you’re realizing your goal setting strategies need improvement.
SMART is such a commonly used goal-setting tactic because it actually works. In case you can’t recall the acronym, it stands for:
S – Specific
M – Measurable
A – Attainable
R – Relevant
T – Time-Bound
Setting strong, achievable goals means following this strategy (literally) to the letter. It’s wise because it works. Every goal you set should contain all five of these crucial characteristics. Miss one? You’ll struggle to be successful.
Playing off our example above, here’s how to turn “Grow my Business” into a SMART goal. Most goals need to be broken down into several SMART goals; each mini goal is a step toward your overall objective to grow your business.
Here’s where the rubber meets the road. I’m not going to lie; this isn’t always as easy as it sounds. Keep in mind the cautions of goal setting—don’t overextend yourself. Keep your goals attainable and specific. Your aim here is to be realistic, so you’re going to want to set goals that are easily broken down into prioritized, actionable items that align your entire team. A true confession here, I have trouble with over-commitment and often think I can do more than time allows. Be cautious.
Target Your Targets
Start at the top with your long-term targets and work your way down (or backward, if you prefer to think of it that way). You should set no more than 5 big, long-term targets, each projecting out about 3 to 5 years. These targets are the HUGE stretch goals (yes, sometimes they feel like your wishlist, but they should still be specific).
Perhaps one of your long-term targets for growing your business is to hit $5 million in sales by 2025. This goal is a great business growth target, but now it’s time to work your way down and break it into small steps.
Take the big target stretch goals and come up with 3-5 SMART goals to take you through this year. So, assuming your sales were $1 million this year, if you want to hit your target, your goal might be to double your sales over the next 12 months, increasing to $2 million by next year. Now, how do you get there? Break it down further.
Setting Clear Annual Priorities
List out the steps you need to take over the next 12 months to successfully complete your goal. Is your team positioned to meet the goal? Does your sales team use a KPI dashboard to track performance? Can you use tools like gamification to motivate your team? Are the proper systems in place to support your goals? What about cash flow?
Look at the health of your entire business today. Where does it need to be in one year for you to complete your goal successfully?
Perhaps you need to update your web content. Do you need to hire more sales associates? Turn these steps into SMART goals as well:
- Clean up the customer database with a new CRM system by Q2 of this year.
- Hire a marketing team member, onboard and train by May.
- Vet content marketing firms and update the website by October.
Set no more than 5 of your annual priorities/initiatives to drive your team’s success in meeting each of your SMART goals. Those goals are then further broken down into quarterly, monthly, and even weekly targets. What should happen this week to put you on track for your timeline? It’s much easier to adjust your path week-to-week when you hit a bump in the road than to panic mid-December when you’re closing your books for the year.
In “Mastering the Rockefeller Habits,” Verne Harnish says your goal setting strategy is as simple as asking, “What do I need to accomplish today to keep this company moving towards its plans at the speed the market demands?”
A quick note about the “speed” element: each industry has a speed at which it must adapt to the market. Apple adapts at a different speed than a mom and pop restaurant, for example. Keep the speed of your industry in mind as you set your pace.
Enlist Your Team
Once you’ve set up your solid annual SMART goals and sketched out your steps, it’s time to enlist the brainpower of your team. Gather your management team (if you’re a larger corporation) or your team of individuals (if you’re a small business). Get your SME’s (Subject Matter Experts) to give their input. As boots on the ground, they’ll offer a great deal of insight into snags you may not anticipate.
Your team will help you identify additional problem areas and potential solutions to fill out those larger annual goals. Maybe improving your credit and collections processes will help you meet long-term cash objectives. Translated into a SMART goal, this looks like “Reduce average A/R days outstanding to 60 days or less for all active customers by Q3.”
There are endless areas and parameters to define your SMART goals. Practically any data point can be used to help measure outcomes. These may include:
- Inventory days
- Revenue per employee
- Customer retention
- Lead generation
- Customer complaints
- Error rates
- The list goes on…
The most important factor is measurability. Your team may offer other ideas of metrics to assess the success of your goal outcomes. That’s why getting them involved is so helpful. They know the impediments, and their perspective is valuable. Involving your team will also help you effectively delegate the tasks and action items as you work toward your goal.
Don’t forget: Any action plan you develop must matter to your customer base and needs to drive competitive differentiation. As you gain knowledge and experience in goal-setting strategies, the process will become easier.
It’s also important you aren’t bogged down with analysis paralysis! Use daily/weekly/monthly metrics and quarterly reviews to track success; adjustments can be made as time goes on. Most of these adjustments will involve tweaking and won’t require taking an entirely new direction. However, never ignore significant unexpected changes in the business, industry, or economy. If this occurs, address the problem(s) and re-direct as quickly as possible.
Another word of caution: if you’re in a tenuous financial position, it’s better to plan quick, very low-risk, very high-value victories. Set your SMART goals to match your current fiscal state.
The SMART goal formula can be used company-wide as a project management tool. How often do we rush headfirst into a project without defining our intended outcome? When you run a business, your day-to-day operations are hectic—but think about the time and money you’ll save if you sit down and hash out the details before you get started.
That’s the bottom line: SMART goals save time and money across your business operations, short-term and long-term. You work hard, so work smart with SMART goals.