How to Create Effective Business Goals

As we begin a new year, many of us are thinking about our New Year’s resolutions. The start of a new year is a great time to be setting new goals for ourselves to strive towards moving forward. As a small business owner, you should also be thinking beyond your personal goals and looking towards your business. To achieve success in the new year, it’s crucial to utilize this time to establish effective business goals.

What are business goals?

A business goal is a predefined target that you set for your business to achieve within a specific time frame. Your small business goals define where your business is going and can help create a framework for how to get there.

Business goals can be broken down into two categories: short-term goals and long-term goals.

1. Short-term: Short-term goals can be achieved in the near future, within 3 to 6 months. These goals tend to be more concrete and actionable, and can be stepping stones towards a larger goal. Some examples of short-term goals could include hiring more employees, creating an online presence, or growing a customer/client base.
2. Long-term: Long-term goals are high-level, strategic goals that are typically achieved in over a year. These kinds of goals give your business direction and can be used as a framework for creating your smaller goals. Some examples of long-term goals could include increasing revenue or expanding into a new market.

When creating a business plan, you should be considering both your short-term and your long-term goals. Start big, then work on breaking down your goals into smaller, more defined objectives that are more easily attainable.

Why is it important to have business goals?

Having effective business goals is the key to having a successful business. Well-crafted and defined goals have several benefits.

• Business goals give your business direction. Clearly defining your goals makes it easier to complete them. Your business goals give you something to focus your efforts towards and keep you on the right track. Studies have shown that people that write out their goals are 42% more likely to achieve them.
• Clear goals can help align your teams. The larger your business becomes, the harder it is to keep everyone on the same page. Having business goals in place can ensure that everyone is moving in the right direction. They also help to create accountability for yourself and your employees.
• Having goals in place leads to better business decisions. When a situation arises and you’re not sure which direction to take, it’s good to have your goals clearly defined. When your business decisions have a clear goal to reach toward, you can feel more secure in the choices that you make.

What kinds of goals should a business have?

When creating a strategic business plan, there are several aspects of your small business that you could consider. You can typically break down your business objectives into three main categories:

1. Financial goals: At the end of the day, running a business is about trying to make money. Your business plans should lead to a desired level of economic growth. Therefore, you should make sure that some of your business goals are financial. Some examples of financial business goals could include improving cash flow management, increasing profit, or cutting production costs.
2. Customer satisfaction goals: A good business should also be concerned with maintaining a loyal customer base. Having satisfied customers can improve the overall reputation of your business, which aids in achieving long-term success. Some examples of customer satisfaction goals could include achieving higher customer review scores, improving customer engagement, or strengthening lifetime customer value.
3. Internal business goals: While many business goals focus on external factors like your customers or your market, it’s also important to have goals that strengthen your business internally. Having internal improvement goals are necessarily driven by economic value, but they can still reap a positive return on investment. Some examples of internal business goals could include operations improvement, innovation achievements, or employee skill development.

Each aspect of your business are equally important and should be treated as such in your business planning. Work to create several goals that cover each of these categories in order to maximize your success throughout the year.

How to create your goals

When creating goals for your business, you should always start with the end in mind. Picture the outcome you want to achieve. What are the necessary steps to get to such an outcome? Keeping this in mind will make it easier to create goals that are detailed and effective.

There are several ways to create effective business goals. One of the most popular ways to articulate your business objectives is through using the SMART framework. This framework has proven to be a powerful tool in goal-setting. SMART stands for Specific, Measurable, Achievable, Relevant, and Time-Bound.

To be effective, your business goals should meet all these criteria:

• Specific: A good business goal is straightforward. What do you want? How are you going to get there? Who needs to be involved? You should know exactly what you want from your goals and have a clear understanding of how you’re going to achieve them.
• Measurable: There needs to be a way to measure the success of your goal. For example, if your goal is to increase your client base, how many are you going to raise it by? 10? 100? 1000? Having a definite measurement gives you a clear finish line to reach towards and allows you to easily determine if the goal has been achieved.
• Achievable: We are often told to aim big and shoot for the stars. But if you want your business to find success, you need to be realistic with your goals. Is the objective something you could reasonably achieve given your circumstances? If not, consider scaling down and starting with a smaller goal.
• Relevant: You should understand how each of your business goals fit into the greater objective of your business. Why are you doing this? What greater purpose does it serve? Make sure that each of your business goals directly tie back into your business’s overarching purpose.
• Time-bound: All of your goals should have a time limit for how long you want to spend reaching the objective to consider it a success. Make sure the timeframe is realistic. If you set too short of a time limit, reaching your goals may be too difficult. If your time frame is too large your achievements won’t be as impressive. Try to find that timing sweet spot to make your goals more effective.

Though creating business goals can’t guarantee success, having them set in place can help drive your business in the right direction!

Bottom Line

All small business owners need to be developing clear goals for their business. Setting goals for your business can improve it inside and out, especially if these goals are well crafted. Be specific with what you want from your business in order to give your team direction and make it easier to measure your small business’s success. Taking the time to perfect your business goals can give you a clear roadmap for achieving greatness in your business’s future.