It’s critical your company set specific business goals for its success.
By William Lynott
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. Setting clear and specific goals is the surest road to that destination. It is difficult—if not impossible—to reach a target that’s fuzzy or one that doesn’t exist at all.
“Businesses without precise overhead and profit goals never make enough money and probably won’t make a profit,” says 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 with specific strategic plans containing clear targets and goals make 33%—a good percentage for any business—more profit than companies without targets.
Here are nine real-world guidelines that will help you to set goals that will guide you along the path to optimum profits and a bright future for your company:
1. Create both long-term and short-term goals.
While usually there will be an interactive relationship between long-term and short-term goals, each one 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 or ten years from now? Where do you want it to be when it’s time for you to retire? Because of the broader nature of long-term goals, it’s best to set them first.
Once you have defined your long-term goals, it’s time to look at the short term—one year or less. What needs to be done now? What areas can you address and expect results will be measurable within a short time?
Long-term goals provide excellent motivation to keep focused on areas looking years ahead that will shape your company’s future. Short-term goals focus on steps to be taken today with results that will be evident within a year’s time or less.
2. Your goals must be specific.
Maybe 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” may sound good but are pitfalls masquerading as goals.
To have meaning and be effective, goals must be expressed in specific, measurable terms. “Improving gross profit by 4%” or “Reducing overhead costs by 6%” 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% satisfies the need for being specific, but without a time limit to accomplish the goal, it has little or no meaning.
Saying you will increase sales by 9% by January 1, 2018 adds a sense of urgency and a no-escape clause, making it difficult to ease 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 is 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 against someone who is better provides an ever-present challenge for you to do better. Playing against someone who is less skilled makes it unnecessary to improve your game, thus lowering your motivation.
When it comes to setting business goals, it’s important to set them high enough so achieving them isn’t going to be a “walk in the park” But they must also be realistic enough they can be achieved. In short, set goals requiring hard work and perseverance—but doable as well.
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
One of the most powerful ways to get support from your employees is granting them a little “pride of authorship.” It’s no secret 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,” San Francisco-based business coach Bill Baren says. “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,” adds Francisco Dao, founder and president of The Killer Pitch, a public relations firm based in Tarzana, California. 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. Remember, don’t forget to include yourself.
If your goals include revenue objectives, obviously your sales team (and perhaps you?) will play a major role. What needs to be done as a team? What needs to be done by individuals?
Reducing overhead expenses is a good example of a goal benefitting from cooperation and enthusiasm from all the employees, some more than others.
Ask yourself which employees are most likely to have opportunities to help reduce overhead. Have you asked them for their input?
7. Don’t carve your goals in stone.
While it is important to keep your goals specific and looking ahead or near, it is 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 you’ve 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 the pressures imposing on our daily lives, the best of intentions left 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 people are nearly 50% more likely to achieve their goals if they write them down.
9. Celebrate every success.
Arguably, there is no better way to keep motivation at a high level than by celebrating achieved successes. Your short-term and long-term goals will be made up of individual increments, step by step by step, 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% of the 300 small business owners surveyed in the recent fourth Annual Staples National Small Business Survey said they do not keep track of their business goals, and 77% 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, set it up for success by applying these nine goal-setting tips.
Bill Lynott is a management consultant, author, and lecturer who writes on business and financial topics for a number of publications. His book, Money: How to Make the Most of What You’ve Got, is available through any bookstore. You can reach him at firstname.lastname@example.org or through his website: www.blynott.com.